Since time immemorial, the private sector trade associations have prevailed on the Government to ensure that export manufacturing and exporting are maintained as tax-free sectors which are inextricably linked.
There was encouraging information recently (November 24, 2013) from Minister Peter Phillips that: "There will be a new duty regime which will allow productive inputs to be imported at zero duty." He explained: "Compared with the current incentives system which offers significant and, in some instances, full relief for certain selected industries with higher rates on income tax, this will provide benefits for all businesses." This includes the reduction of corporate income tax from 33.3 per cent to 25 per cent, with effect on January 1, 2014. New capital allowance rules will also be introduced for capital expenditure as at January 2014; for example, a taxpayer is able to write-off a factory building over the useful life of the asset. Details of the productive inputs to be imported at zero duty are eagerly awaited, which should improve export costing.
The relationship between importing for export production is frequently overlooked and sometimes not fully understood. The review of border taxes necessitates greater attention towards zero rating for those materials imported specifically for re-export and certified by the importer as essential ingredients for export production.
This does not constitute a demand for abolition of all taxes, but exemption of taxes on export-specific materials designated and certified by the importer for manufacture and export. The basis for this recommendation relates to the internationally competitive pricing for export goods that are being adversely burdened in certain instances. Of prime concern are border taxes applied without due diligence regarding the importance of tax-free imported materials necessary for internationally competitive pricing of Jamaican products in overseas markets.
Importantly, this growth development factor was referred to in the World Trade Organisation (WTO) Trade Policy Review 2010, WT/TPR/S/242 page VIII (2)-9 as follows:
"Numerous taxes and fees on imports raise border protection markedly and raise the question whether excessive import taxation may be hindering competitiveness. All imports entering Jamaica are subject to a basic stamp duty, and an additional stamp duty is payable on certain items. While Jamaica does not apply fees on containers imported or exported (now applied) or port security fees, it imposes fees for providing specific services including: