… GMSA calls on Gov’t to intervene ahead of budget 2018

THE sale of locally manufactured soft drinks are on the decline, the Guyana Manufacturing and Services Association (GMSA) said, claiming that the imposition of an environmental

levy of $10 per unit on non-returnable containers used to package alcoholic or non-alcoholic beverage has given rise to smuggling.

Earlier in January, the Customs (Amendment) Bill was passed in the National Assembly paving the way for the imposition of an environmental levy of $10 per unit on the importers and local manufacturers of products using non-returnable metal, plastic or glass container to package any alcoholic or non-alcoholic beverage.

The amendment to the Customs Act was in response to a 2014 ruling by the Caribbean Court of Justice (CCJ), which resulted in Guyana refunding Rudisa Beverages and Juices N.V a total of $1.2B for environmental taxes collected from that company.
Rudisa had contended, and the court ruled, that the tax violated the rules of trading in the regional trade and integration bloc, CARICOM, of which both Guyana and Suriname are members.

But close to a year after the Environmental Levy took effect, GMSA is contending that the introduction of the levy is having a negative effect on the sale of locally manufactured beverages, the majority of which are bottled in non-returnable containers.
“There has been a drop in consumption of (locally manufactured) soft drinks in plastic bottles, and soft drinks in plastic bottles is about 95 per cent of the carbonated beverage in the market,” GMSA Board Director, Ramesh Dookhoo told Guyana Chronicle in an exclusive interview.

“Based on the figures I have seen, it (sale) has gone down,” he added.
According to him, since the introduction of the environmental levy, there is now an incentive to smuggle soft drinks into Guyana.
Just days ago, the Law Enforcement and Investigation Division (LEID) of the Guyana Revenue Authority (GRA) seized millions of dollars’ worth of smuggled beverages that were being brought into the country from Trinidad and Tobago.

“Small drinks are very easy to smuggle, you just go across to a neighbouring country, buy the soft drinks and ship a boat load down here, and you can sell it cheaper than the person who pays the environmental tax,” the GMSA Board executive posited.

AGED OLD ISSUE
In a separate interview, GRA Deputy Commissioner (Excise Stamp and Environmental Levy, Customs, Excise and Trade Operations), Rohan Beekhoo told Guyana Chronicle that smuggling of alcohol and non-alcoholic beverages is an aged old issue. He said GRA is putting strategic systems in place to combat the trade of contraband such as the introduction of Excise Stamps for alcohol (excluding beer) and tobacco products being imported into the country.

Beekhoo, while acknowledging that there has been a recent seizure of a large quantity of smuggled beverages, said smugglers are not only trying to evade the payment of the environmental levy, but also the Value Added Tax (VAT) and other duties. He could not draw a correlation between the introduction of the Environmental Levy and the “perceived” increase in smuggled beverages.

Aside from the issue of the illicit trade, local manufacturers are viewing the Environmental Levy as a financial burden.
Ahead of the presentation of Budget 2018, Dookhoo said the GMSA Board met with Finance Minister, Winston Jordan, to express their concern. It is the belief of GMSA that local manufacturers should not be compared with importers.

“We have told the minister that if you are a manufacturer of soft drinks in Guyana, you are obligated to pay for your environmental permit every year. In order for you to get that permit you have to meet standards of emission, standards of not doing damage to the environment in that manufacturing process, a cost is attached to all of that, and that cost is not incurred by someone who is importing soft drinks,” Dookhoo said.

According to him, GMSA has asked the finance minister to seriously consider amending the environmental laws of the country to ensure that local manufacturers are treated fairly in their own jurisdiction.
“The cost of preserving the environment and maintaining the environmental licence is a humongous task,” he underscored.

Though such amendment would not entail a process, he believes that it should remain on the front burner when considering manners relating to the private sector.
“I think the minister needs a lot more technical data which he don’t have and we’re prepared to provide that to him,” Dookhoo said. He said the GMSA is pleased that the Finance Ministry has continuously engaged the GMSA on issues affecting its members.