Gov't revises additional stamp duty on alcoholic beverages

BY BALFORD HENRY Senior staff reporter balfordh@jamaicaobserver.com

Wednesday, May 21, 2014    

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GOVERNMENT yesterday announced a revision of the additional stamp duty recently placed on alcoholic beverages.

Finance and Planning Minister Dr Phillips, in a statement to the House of Representatives, said Government had proposed amendments to the original revenue measures tabled in April to raise $6.7 billion to fill the gap created by the 7.5 per cent primary surplus target, providing for a reduction in the specific additional stamp duties (ASD) paid on alcoholic beverages.

He said that the changes were being made consequent on two things: the impact that the unification of the special consumption tax is likely to have on the tourist industry's continued competitiveness; and (2) a "more rigorous calculation" of the revenue to be garnered from the alcoholic measure, which has revealed that significantly more revenue would be received.

However, the minister did not state when the "more rigorous calculation" of the projected revenue was done, or whether it was his ministry that had failed to recognise that significantly more revenue could be received than originally projected.

Opposition spokesman on finance and planning, Audley Shaw, on Tuesday night signalled his intention to pursue a full explanation from the minister as to exactly what happened.

"He has not explained what is the new revenue picture, and the bottom line is that what I am seeking is the details. Give me the details. I want the details, now," Shaw told the Observer last night.

The Opposition spokesman noted that the matter was not discussed with the taxation committee of the House, nor did the minister table a ministry paper with the proposals.

Dr Phillips had promised to bring legislation to the House soon to get approval for the changes. He said that the specific additional stamp duty regime for alcoholic beverages would be amended by decreasing the specific ASD on wines, liqueurs and cordials from US$1.60 per litre to US$1; and on beers from US 90 cents to US 60 cents per litre.

He said that in order to counter some of the impact of the new measure, the Government has also taken the decision to provide tax relief of approximately $200 million to the hotel industry.

"The extent of Government's revenue from both measures will be unchanged," Phillips said. The measures take effect on June 1.

Phillips also announced the removal of the 20 per cent Common External Tariff payable on smartphones imported into Jamaica, effective July 1; amendments to certain laws to allow for the regularisation (and expansion) of tax treatment for free zone operations and tourism sub-sectors, effective June 1; suspension of duty payable on telephones, including cellular phones, effective July 1; and an expansion of the inputs allowed as per productive inputs relief (PIR) to include motor vehicles, including rentals, and expansion of the said PIR to include animals feeds.

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