KINGSTON, Jamaica—The Jamaica Manufacturers and Exporters Association (JMEA) is warning that the Government’s decision to expand the Environmental Protection Levy to 100 per cent of manufacturers’ sales could weaken the competitiveness of locally produced goods and give imported products an advantage.

The change, introduced as part of the Government’s 2026/27 fiscal package, is expected to generate about $3.6 billion in additional revenue. While acknowledging the need to raise funds for national recovery efforts, the JMEA, in a media release, said the measure could have unintended consequences for one of Jamaica’s most productive sectors.

JMEA President Kathryn Silvera said the change alters the competitive balance between locally produced goods and imports.

“This change is not a simple technical adjustment,” Silvera said. “It fundamentally alters the competitive balance between locally produced goods and imports. At a time when Jamaica needs to strengthen domestic production and expand exports, policies that penalise manufacturers move the economy in the wrong direction.”

The JMEA said under the existing structure, the environmental levy is applied differently to imports and domestically manufactured goods. Imports are taxed on their cost, insurance and freight value at the port of entry, before distributors and retailers apply their mark-ups. Local manufacturers, however, pay the levy on the final sales value of their products.

It noted that previously, the policy partially addressed that difference by applying the levy to 75 per cent of manufacturers’ sales, reflecting an estimated 25 per cent mark-up typically applied to imported goods after they enter the domestic market. The new measure removes that adjustment, meaning manufacturers will now pay the levy on 100 per cent of their sales.

Manufacturers say the higher levy could increase production costs, compress margins and reduce export competitiveness, potentially leading to higher consumer prices.

The association said manufacturing plays a key role in Jamaica’s economy through value-added exports, employment and linkages with sectors such as agriculture, logistics, retail and services. Policies that increase the cost of local production, it said, can ripple through the wider economy.

Industry leaders also warned that over time such dynamics could allow imports to gain market share while domestic production weakens, with implications for jobs, foreign exchange earnings and economic resilience.

The concerns come as the Government seeks to mobilise additional revenue following damage caused by Hurricane Melissa, which authorities estimate resulted in about US$8.8 billion in losses, roughly 41 per cent of gross domestic product. The 2026/27 national budget includes tax measures expected to generate about $29.6 billion to support recovery and reconstruction.

While recognising the importance of fiscal stability, the JMEA said tax design is as important as the revenue it generates.

“Increasing the Environmental Levy on manufacturers may raise revenue in the short term, but it risks weakening the very sector that generates jobs, exports and economic growth,” Silvera argued.

The association said several export-oriented economies avoid placing additional tax burdens on domestic production and often zero-rate or exempt exports from consumption-based taxes to maintain international competitiveness.

The JMEA urged the Government to reconsider the measure and adopt a more balanced approach, including maintaining the discounted levy base for manufacturers, exempting or deferring exports, and ensuring environmental taxes do not inadvertently weaken productive sectors.

“Jamaica cannot build a resilient economy by taxing the industries that create wealth,” Silvera stressed. “Our growth strategy must support production, investment and exports, not make them less competitive.”