Fri | Jun 22, 2018

JACRA cess revolt

Published:Friday | May 25, 2018 | 12:00 AM
Larry Watso, general manager of Confectionery & Snacks Jamaica Limited and president of the Jamaica Chamber of Commerce.

The new commodities regulator, which launched operations in January, has began to impose fees on growers and processors, but various non-agricultural traders have also been caught up in the net as importers of raw materials and finished goods.

Those operators, who are facing a spike in the cost of business, are turning to different arms of government, including investment promotion agency Jampro and the ministry responsible for agriculture, to find workarounds to the cess.

In March, the Jamaica Agricultural Commodities Regulatory Authority, JACRA, advised traders of the cess set on six crops - turmeric, ginger, pimento, coffee, cocoa and coconut - to take effect April 1, from which it would fund its operations.

The rates ranged from 18 US cents to US$2.40 per kilogramme, with coffee facing the highest charges.

The missive from JACRA sparked calls for the agency's repeal, even though commodities reform and its attendant legislation were years in the making and the agency itself is less than five months old.

Larry Watson, the general manager of Confectionery & Snacks Jamaica Limited, which imports cocoa-filled chocolate products for distribution, joined the call for a repeal of the JACRA legislation on Monday, saying the attempt to tax imports of finished products would be logistically impossible to implement.

"We had no tax before, and the tax is now 22 US cents a kilogramme," he said, with reference to the cocoa cess.

"Think of a Bobby, which is a chocolate-covered peanut - how are they going to know how much of the Bobby is chocolate and how much is peanut?" he said, while also referencing importers of other cocoa-based products, such as lotions and cake mixes, who would be faced with the same dilemma.

Watson, who is also the current president of the Jamaica Chamber of Commerce, acknowledged that JACRA needs funds to run its operations, but said the agency should devise other means of financing itself.

JACRA regulations gazetted on January 9, 2018, levies the cess on commodities in three categories - imports, exports and an industry fee - as follows:

- Pimento: imported raw material, US$0.40/kg; 4% of shipment value for exports.

- Ginger: imported finished goods, US$0.56/kg; 4% of shipment value for exports.

- Turmeric: imported raw material, US$0.20/kg; 4% of shipment value for exports.

- Coconut: imported finished goods and raw material, US$0.35/kg.

- Cocoa: imported finished goods, US$0.22/kg; 2% of shipment value for exports; industry cess of J$55 per box.

- Coffee: imported finished goods, US$2.40/kg; imported raw material, US$1.41/kg; US$0.18/kg, US$0.36/kg and US$0.52/kg for exports of various product categories; industry cess of J$53, J$91 and US$0.18 per box on various product categories.

Payment of the cess by a grower, processor, manufacturer, importer or exporter is due 10 days after the sale of the product. The charge doubles if the entity fails to adhere to the payment schedule. They must also file annual sales records with JACRA, for which a breach incurs a fine of $3 million.

Speaking as chamber president, Watson said during consultations with Jampro, businesses were advised that the cess might be applied to the whole weight of the box of imported goods.

"The truth is, they have no comprehension of what is being asked for," said Watson, with reference to the schedule of fees.

"Some products are taxed at 4 per cent, some taxed at 2 per cent, some in US dollars and some in Jamaican dollars - it's one massive confusion. When you buy a soap flavoured with coconut, they have to tax it. Everything with curry, everything with ginger, everything with cocoa, when you buy a chocolate Ensure drink, they will tax you," he charged.

Confectionery & Snacks Jamaica produces more than 20 cocoa-based products, but Watson also points out that other distributors of products such as Cadbury chocolates and Betty Crocker cake mix would be caught in JACRA's net.

In mid-May, the Ministry of Industry, Commerce, Agriculture and Fisheries told the Financial Gleaner that meetings were being held over the issue and that a public advisory would be issued on the way forward.

" ... The ministry will provide a comprehensive response to the media and other stakeholders in a briefing proposed to be held soon," said Director of Communication and Public Relations Doreen O'Connor.

avia.collinder@gleanerjm.com