Minister of Finance and the Public Service Dr Nigel Clarke has announced that General Consumption tax (GCT) on imported raw foodstuff, including vegetables, will be abolished in coming weeks, in keeping with international trade treaties.

Speaking yesterday in the Lower House of Parliament during his presentation of the budget for fiscal year (FY) 2024/25, Dr Clarke explained that the Government had to take into account balancing the risk of being blacklisted by the World Trade Organization (WTO) with the loss of tax revenues.

At present, while the standard rate of GCT is applied to imported raw foodstuff, there is no such tax charged on local raw foods. And while the finance minister acknowledged that the policy aims to protect the local agricultural sector, he pointed out that it breaches international trade agreements and runs the risk of the country being sanctioned.

“Unfortunately, Madame Speaker, this policy could be interpreted as Government-sponsored protectionism and distorting competition between markets. While the Government remains committed to supporting domestic agricultural production, Jamaica is also obligated under the conditions set out by virtue of our membership in the WTO [World Trade Organization], and based on the national treatment principles set out in the General Agreement on Trade and Tariff (GATT), Jamaica is categorically not permitted to implement policies or measures that are designed to protect domestic products,” Clarke outlined.

Given the choice of being blacklisted by the WTO and removing GCT on imported foodstuff, the minister said he chose the latter. This will create an equitable market for both local and imported produce and offer consumers more affordable options.

However, the abolishment of the GCT, which will take effect in the first quarter of FY 2024/2025, will result in a loss of $2.4 billion.

Clarke said that the Government can still apply additional stamp duty on imported raw foodstuff.

“Madame Speaker, in keeping with Jamaica’s trade obligations, the GCT on all raw foodstuff – imported or domestic – will be removed…We don’t have a choice and we’re not going to wait until the blacklisting by the WTO is final to do something about it and we can provide the evidence to support what we’re saying,” he emphasised.

The minister said he has also discussed with Minister of Agriculture and Fisheries Floyd Green the possibility of increasing the number of licences for raw food importation “so that the gain passes through to consumers”.

“These are measures that we’re using to benefit the Jamaica people to allow a better experience and also lead to administrative ease,” Dr Clarke said, prefacing his announcement.