Bauxite Levy In Place for Upcoming Fiscal Year: Ministry of Finance

Bauxite Levy In Place for Upcoming Fiscal Year: Ministry of Finance

Jamaica’s Ministry of Finance laid to rest concerns regarding the government’s bauxite levy last week when it addressed Auditor General Pamela Monroe Ellis’s concerns regarding the levy’s status in the upcoming fiscal year.

Ellis raised the question after the Fiscal Policy Paper for 2017-18 described a change in the structure from the current levy to a profit-sharing regime or a profit tax on bauxite companies.

“Based on the ministry’s confirmation that there was no change in the taxation regime, the ministry should make the necessary correction to the Fiscal Policy Paper,” wrote Ellis in an independent assessment report brought to Jamaica’s Parliament last Tuesday.

The paper went on to say that Alpart and Noranda would not render payments under the bauxite tax regime, as those firms had separate agreements regarding taxation with the government.

“These agreements reflect a change in taxation regime for the bauxite sector wherein the companies move towards the payment of profit tax or profit sharing and away from the payment of a levy,” elaborated the report.

According to a preliminary assessment, Jamaica’s government took in JMD1.83 billion (USD14.3 million) over the course of the fiscal year through the end of December, which was JMD150 million (USD1.2 million) shy of the government’s projection of JMD1.98 billion (USD15.4 million). The projection for the 2016-2017 fiscal year was boosted by 33.1% over the previous fiscal year, when it totaled JMD2.11 billion (USD16.4 million).

The government explained the shortfall as being a symptom of the drop in bauxite production, a decline in bauxite demand, and delays in reopening Alpart’s facilities. Ellis reported that bauxite production for the period was down year-on-year by 22.9%.

“This would negatively affect bauxite levy collections, which are based on production,” she explained.

Jamaica produced 8.5 million metric tons of bauxite ore in the calendar year of 2016.