BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com
Sunday, October 12, 2014
DISHONEST importers continue to mis-classify a raft of items including “synthetic hair” in order to benefit from cheaper duty, stated Joseph M Matalon on Thursday night.
As such, he wants Government to review tariffs that hike duty on primary products but slash tax on finished goods made from the same material, arguing that they impact the country especially as it relates to Caribbean Community (Caricom) imports.
“Articles of synthetic hair attract duty of 20 per cent, but articles of human hair attract duty of 5.0 per cent,” he said. “…and I must tell you, vast amounts [of human hair] were imported into the island,” said Matalon, who heads the Private Sector Working Group on tax reform and is also chairman of ICD Group.
Matalon was addressing the Jamaica Manufacturers’ Association (JMA) 46th Annual Awards Banquet at the Jamaica Pegasus Hotel in New Kingston.
Weave imports are set to hit $1 billion this year, based on growth over the last four years. The island imported US$7 million ($770 million) worth of the product in 2012, up from US$3.3 million in 2008, according to the International Trade Centre, an affiliate of the World Trade Organisation and United Nations.
“The complexity of our tariff structure and the number and wide disbursement of duty rates imposed, even within a single tariff, provide myriad opportunities for unscrupulous importers to mis-classify imports in an effort to evade legitimate customs charges,” explained Matalon, who gave another example of red kidney beans which attract duty of 40 per cent while red beans (processed) attract no import charge.
His reference was to trade mechanisms under the present tariff structure that, by and large, “impose protective tariffs on primary products” while allowing “low or zero tariff on finished goods of those same primary products”.
“In both cases I have cited, the rigidity of the current CET prevents us from undertaking reforms, from addressing these issues to the benefit of the economy and all its participants,” he said. “I have no doubt, if polled, that all the national customs departments in the region — with the possible exception of Trinidad [the largest Caricom trader] — would share this view.
“Surely, as the largest consumer market in Caricom, Jamaica can — and has a duty — and must demand that these issues be addressed through a reform process at the level of Caricom itself,” he said, eliciting applause from the roughly 500 guests.
Imports into Jamaica are greatest from the USA, followed by Venezuela and Trinidad & Tobago (T&T).
“In my own view, if we are to remain in the unit — not on the basis of sentimental historical inaction, but on the basis of true mutual benefit — then maintaining the status quo is not a serious option,” he concluded.
Last year, the JMA claimed that manufacturers from T&T were misrepresenting items as originating from within Caricom — which would entitle the goods to duty-free status. However, a rate of duty or common external tariff is applied on products originating from outside the grouping.
In fact, last year’s JMA guest speaker, former Industry Minister Claude Clarke, called for Government to suspend the CET for the duration of the Jamaica‘s International Monetary Fund (IMF) programme.
The Economic and Social Survey Jamaica 2012 indicates that Jamaica‘s annual trade deficit with Caricom narrowed to US$775.3 million relative to US$916.0 million in 2011. The improvement was attributed to a 22.4 per cent rise in exports to US$83.2 million and a 12.7 per cent reduction in imports to US$858.6 million.
On Thursday, Red Stripe was named Manufacturer of the Year to top off a night on which the brewery claimed five awards in total — more than any other company this year.
The other awards that went to Red Stripe included Champion Exporter in the category of large exporter, Digicel Business ICT, NCBJ Best Environmental Management, and Robert Lightbourne Skills & Productivity.
JMA President Brian Pengelley, in his address, said that local manufacturers were finding new markets, including Brazil, India, Africa and China and the Caribbean.
“There is a niche market for processed foods, beverages, indigenous high quality fashion. In South Africa there is demand for tea, coffee, beers and rice. In Cuba, our closest neighbour, there is demand for processed foods and beverages. Also opportunity is ripe for export to the French Caribbean including Guadeloupe,” Pengelley said.
Some of the larger awards included the Ray Hadeed Award for best small and medium enterprise, which went to Caribbean Flavours & Fragrances; the Eddie Hall Award for New Manufacturer of the Year went to Spring Vale Enterprise; the C Henderson Davis Award for Breakthrough Product of the Year went to Fersan Ltd. Champion Exporter medium size went to PA Benjamin, while Champion Exporter small size went to Honey Bun.
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Matalon urges customs duty reform at Caricom level
