Government to establish clear tax-break policy
By Vernon Daley, Staff Reporter
Friday, November 1, 2002
THE GOVERNMENT is to abandon its approach of awarding incentives to companies on a discretionary basis and will, instead, craft a policy that sets clear guidelines for businesses to attract such benefits.
Added to this, the P.J. Patterson-led administration will be targeting certain sectors for special incentive programmes, based on the potential of those areas to grow the economy and create jobs.
"What we want is to simplify the process and instead of having much of it remaining discretionary, we will specify what the criteria are and once those criteria are met, those incentives should become readily available," Mr. Patterson told Gleaner reporters during an interview at his Jamaica House office earlier this week.
He said the potential of a company to stimulate jobs would be an essential element in determining whether it would be given an incentive.
There are two layers to the policy. The first is a general package that would consolidate existing incentives for various sectors and specify the terms under which companies could get those benefits.
"In addition to the general package of incentives, we are going to be offering special incentives in sectors that we have identified as having the greatest potential to contribute to the incremental growth of our economy as well as incentives for enterprises that are operating in depressed or rural areas," Mr. Patterson said.
However, he did not say what areas were being picked by his Government to stimulate growth in the economy.
Last year, the Government was criticised sharply by business interests and financial analysts for its decision to give a $2 billion tax incentive to local brewers Desnoes & Geddes (now Red Stripe).
The critics contended that the unilateral and discretionary move in giving the company the tax break pointed to a need for reform in the way incentives were granted to companies and various sectors.
At the time, Dr. Omar Davies, Finance and Planning Minister, defended the decision, arguing that without Government support the company might have been forced to close its doors, dumping scores of employees on the streets.
The Development Council - a grouping of Government members and technocrats which meets regularly on economic matters - has approved the new incentives policy.
"It is now the subject of discussion with the private sector," the Prime Minister said. He added that he was looking to a swift conclusion to the talks, so the policy could come to the Cabinet for final approval.