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Green energy traders lose tax subsidy - Say consumers will be hit with higher prices

Published:Friday | June 10, 2011 | 12:00 AM

 

Sabrina Gordon, Business Reporter

A tax waiver on renewable energy products has expired, creating uncertainty among distributors of imported technology on whether business can be sustained without the subsidiary.

The Government is itself unsure whether the agreement with its bailout partner, the IMF, will allow it to restore the suspension of the common external tariff, information obtained by the Financial Gleaner suggests.

The issue is said to be complicated by the review and relegislating of aspects of the structure for tax waivers launched amid concerns by the IMF of the distorting effect of incentives and their opportunity cost on the Government.

The renewables waiver was a component of Jamaica's push for households and businesses to consume more green technology, including products such as energy-saving bulbs, under the broader rebalancing of the energy mix.

"The custom duty on renewable products was suspended two years ago and we were of the view that they would have removed it totally, with the goods remaining zero-rated items, as was the case," said Milton Miller, owner of Conserve It Limited, one of several companies operating in the renewable energy sector.

Miller said the suspension expired at the end of May and is likely to have a significant impact on the importation of products and, ultimately, the cost to consumers.

"That suspension was not renewed and custom officers will now charge the duty, resulting in a significant rise in cost," said Miller.

"What this will do is to drive up the cost of energy-efficient products to the common person," concurred Chinyere Nwaogwugwu, projects director at ECO TEC, a Montego Bay-based company specialising in the supply of water-saving energy products as well as the design, installation, and maintenance of renewable-energy systems.

Miller estimates that with the duty applied there will be an approximate 25 per cent increase in the cost of importing renewable-energy products.

Miller said that the proposed CET duty is 20 per cent of the cost, insurance and freight value of the goods.

Businesses in the sector are trying to meet with the relevant ministries - energy, finance and commerce - to put forward "concerns over the prospect of not receiving this much needed subsidy for the industry," he said.

The duty waiver is considered the only meaningful contribution the Government has made to assist in the growth and development of the industry.

"The number of persons using renewable energy has increase over the last three years, year on year by about 50 per cent," said Miller, giving credit to the waiver.

He said his and another company have a combined US$600,000 worth of goods in transit and that he was concerned about treatment of the shipment at Customs.

The Ministry of Mining and Energy lists on its website about 30 energy-efficient items for which the CET was suspended. Close to an additional 100 recommended items are also named under items listed for suspension of the CET.

But government representatives were not readily available to speak about the matter.

Queries sent via email to the Ministry of Industry, Investment and Commerce were sent to officers in the Ministry of Finance and Public Service, as well as the Ministry of Mining and Energy.

But none of those persons were available to speak.

However, in recent times the Government has been pushing for the use of alternative energy and the use of energy-efficient products.

But at the same time, the Government is also in the process of revising its strategy in the granting of new statutory waivers or extension of existing waivers.

sabrina.gordon@gleanerjm.com