Cummings, Azan and Shaw

IT HAS been the saviour for many businesses but Friday may be the last tax break enjoyed under the stimulus package for the tourism sector.

As of July 30, hotels will no longer enjoy half GCT of 4.125 per cent, which was extended to them under the stimulus package, unless Finance Minister Audley Shaw agrees to extend the relief.

"I wrote to the Minister of Finance and I have asked him to extend it at least until December," Wayne Cummings, president of the Jamaica Hotel and Tourist Association (JHTA) told The Sunday Gleaner.

Hotels normally pay GCT at the rate of 8.25 per cent. Cummings told The Sunday Gleaner that, had they not been given the tax break, the sector may have folded.

Prime Minister Bruce Golding had extended a raft of relief measures for businesses after a malevolent economic wave began sweeping across the globe, flattening many economies.

Shaw last week indicated that Jamaica would be returning to the International Monetary Fund (IMF) for balance of payment support.

On Friday, Cummings said that, despite Government being hard-pressed to run the country, the sector would be in danger if the relief is not extended.

"We are very aware of the government's fiscal challenges but their fiscal challenges would be even further exacerbated if we falter. If our sector starts to buckle, the results would be unimaginable," Cummings said.

welcome assistance

Business interests who have benefited from the stimulus programme have hailed it as a welcome assistance in a time of great need.

Cummings said that, since the stimulus was instituted in January, hoteliers, on average, have been able to pay bills within 30 days, down from 90 days during the last three months of last year when the reality of the global recession hit home.

He said that they have been able to pay workers, save jobs and pay for produce and other overheads because of the approximately $650 million they have saved from the reduction in the GCT.

But it is not just the tourism sector that is showering the praises. Omar Azan, president of the Jamaica Manufacturers' Association (JMA) said that the removal of the two per cent custom user fees (CUF) for the manufacturing sector has been a saviour for many business.

improved cash flow

"We have not done an analysis on it but we know it has helped in terms of the manufacturer's cash flow," Azan told The Sunday Gleaner.

Government in January removed the two per cent CUF on capital goods and raw material for the manufacturing sector as part of its stimulus package.

The Caribbean Policy Research Institute (CaPRI), an independent think tank affiliated to the University of the West Indies, estimated that the removal of the CUF would amount to $2,507 million in savings for the manufacturing sector.

CaPRI estimates that the Government will be spending and/or forgoing at least J$4.6 billion over a one-year period and this works out to be about 0.59 per cent of gross domestic product (GDP).

Azan said that the saving has allowed manufactures a bit of a wiggle room with its cash flow. But despite being grateful, he is prodding Government to go a step further.

greatest stimulus

"The greatest stimulus to the manufacturing sector now would be a reduction in interest rates," Azan said.

He argued that if interest rates are brought down then it would make the manufacturing sector more competitive.

"Trinidad and Tobago did it recently and I think we should go that route also," Azan said.

Small and micro enterprises, which were also targeted in the stimulus package have also given commendations.