Is Jamaica really ready for business?

Is Jamaica really ready for business?

Richard Blackford

Sunday, May 08, 2016

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This past week I had cause to fly into Kingston, Jamaica, as I had a small amount of products that I needed to deliver directly to a client of mine, an effort which brought me into contact with the Jamaica Customs at the Norman Manley International Airport.

As part of the same trip, I needed to tie up some other arrangements with another client which required my visiting the National Commercial Bank (NCB) branch in New Kingston. Both exposures caused me to think long and hard as to Jamaica’s chances for increased productivity and growth, as in each instance the experiences were neither pleasant nor encouraging.

At the airport I was required to pay a total of $30,036 on an invoice value of US$252 or $30,744, representing 98 per cent of the value of the invoice. Of the amount paid, only $6,200 represented import or customs duty, while General Consumption Tax (GCT) was $10,989 or 30 per cent of the combined invoice and customs duty levied, instead of the 16 or 17 per cent that I was informed as being the customary charge.

In the course of effecting the customs clearance process, the Government helped itself to a whopping $12,500 as an arbitrary customs user fee charge, based on an argument that I ought to have had a Tax Compliance Certificate in order to avoid such a charge. Essentially, Jamaica Customs is in the business of revenue extraction, as opposed to border protection, and every attempt is made to extract this particular revenue charge from anyone who has the temerity to come through the airport with what appears as taxable goods.

For a country that has been dogged for more than five decades by an inability to provide sustainable economic opportunities for the majority of its population, one would think that by now the policy framers would have realised that levying penal charges at ports of entry is not the way to go in order to stimulate enterprise among its people. In fact, such an approach runs completely contrary to the groundbreaking policies of Manley and Seaga, respectively, between 1978 and 1985, which equally recognised their challenges at raising and maintaining employment levels, and sought to encourage self-reliance and entrepreneurial creativity among the economically challenged at the time.

Sadly, we have neither been able to graduate from that thinking nor attained any more meaningful success at transforming enterprise. The consequence has been policies geared more toward tax extraction as opposed to broadening the productive base and generating greater revenues through increased economic participation and output.

Jamaica reportedly has some of the highest personal income tax and customs rates anywhere in the world, and while there is always a need to defend government revenues, such a taxation strategy hardly encourages enterprise in a weak economy. Instead, it provides umbrella incentives for importers to constantly seek ways and means of evading these incessantly high fees/charges.

It appears that our policymakers are unaware of the adage that "one captures more flies with sugar than they possibly will with vinegar". Regardless of the item, why not levy the standard percentage GCT charge along with the related import duty percentage since all resellers must pay taxes, either on their businesses or ultimately as consumers via GCT, and also since all re-sellers have an obligation to remit same to the tax authorities once it is collected.

I believe that the task of rescuing the Jamaican economy lies in the Government’s ability to transfer the responsibility of growth back to the population — a proposal mooted by the Andrew Holness Administration — wherein Government becomes a facilitator of growth and development, rather than its customary role of attempting to intersperse itself into operating actual business agencies such as they do with Customs.

At the same time, Government must adopt an attitude geared toward encouraging and facilitating economic activities, rather than seeing such activities as targets for saddling entities or individuals with endless layers of taxes, even before the entity is able to stand on its proverbial feet. Government’s appetite for tax imposition and collection from minimal users is a disincentive to production and, by extension, growth. Unless there is a complete reassessment and recalibration of our efforts, all we succeed in doing is pushing people further underground with their business activities or forcing them altogether out of the system.

Following on the experience at Customs, I had to navigate a meandering line at the National Commercial Bank in New Kingston for one hour and 34 minutes in order to complete a simple over-the-counter transaction. I joined the bank line at 9:48 am with 22 people ahead of me. At the time I observed that there were five counter clerks serving the line, with one clerk designated for business customers.

The clerk-customer turnover or service rate was one customer every 18 minutes, as the bank uses archaic and cumbersome paper documentation processing despite having an electronic system. No effort is made to provide any meaningful service, as this could not be if you have to stand in line in excess of an hour-and-a-half in order to encash a cheque.

Really now, NCB? Really now, Jamaica? If this is the way that banks do business generally, it is clear to me that the banks have little concern for the collective man-hours lost on a daily basis by virtue of their archaic operational approaches. What was really worrisome was the fact that people actually do this at banks every single working day with little or no complaint.

These are just two areas that, if addressed, could bear immediate fruits as far as providing increased incentives to individuals and businesses, not to mention the obvious increased productivity for the nation. Hopefully, the much-heralded business czars/growth ambassadors may want to provide some focus on these areas.

– Richard Hugh Blackford is the owner of Yardabraawd International LLC and is a self-taught artist, writer and social commentator. He shares his time between Coral Springs, Florida and Kingston, Jamaica.

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