The Government has taken note of a press conference staged by representatives of the Grenada Chamber of Industry and Commerce (GCIC) and the Grenada Hotel and Tourism Association on Thursday 15th November in which the subject of Government’s support for Manufacturing and Tourism were dealt with.
In summary, the claim was made that Government was not extending adequate support to these two sectors. Concern was also raised about lack of new Foreign Direct Investment and the unsatisfactory pace of implementation of projects.
As a public service, and in advance of a full press conference which will be held on Monday 19th November to address these matters, the Government wishes to make it clear that the Manufacturing and Tourism Sectors in Grenada are the beneficiaries of the widest range of special incentives and other support measures put in place by Government.
Here are some of them:
(1). No Common External Tariff (CET) is paid on packaging materials, raw materials, spare parts and equipment
(2). The maintenance of an import license regime for products competing with locally manufactured goods
(3). Exemption of Annual Stamp Tax on exports of manufactured products
(4). Income Tax relief under the Grenada Investment Promotions Act
(5). Zero Rating of VAT on Exports
(6). Exemption of Excise Tax on alcohol to be used as an input into the manufacturing process
(7). 10% rebate on VAT exclusive sales to be used to offset any tax arrears except VAT
(8). Reduced VAT rate of 10% on accommodation
(9). 50% retention of VAT during the off-season (September-November 2010)
(10). VAT exemption of Service Charge
(11). Most hotels enjoy a tax holiday (accelerated depreciation)
It should be noted that all the above facilities preserve the cash flow position of the companies, while the Government foregoes the collection of revenue.
With these incentives Government has given up millions of dollars in revenue; for example the 10% Manufacturers Rebate has resulted in the giving up of over $10 million annually.
In keeping with Government’s commitment to competitiveness, its belief that partnership is an essential pillar of Governance and in recognition of the challenging economic and financial situation facing businesses, Government has endeavoured to maintain a running dialogue with the Private Sector to review the nature and extent of Government support to the Sector, including the reform of the Doing Business environment.
In recognition of the need for common practical solutions to be worked out, the Government and the Private Sector invested a great deal of effort in trying to craft a Social Protocol in 2008-2009.
It is in keeping with this spirit and in recognition of the need for inclusion and collaborative effort that Government has facilitated Private Sector representation in various committees and bodies that have served in an advisory capacity with respect to Public Policy.
Government has held bi-lateral consultations with manufacturers, hoteliers, representatives of the construction sector, small business operators, agro-processors, the banking community, as well as with many professional bodies.
In the period leading to the introduction of the Value Added Tax (VAT), more than 700 briefing sessions were held by the Inland Revenue Department with Private Sector businesses.
In recent months dialogue has been ongoing between the Manufacturing and Hotel Sectors with regard to the peculiar challenges they face.
Discussions have been facilitated by the Prime Minister, the Minister for Finance and the Minister for Tourism, as well as by a number of public officers. As far as Government is concerned these discussions are ongoing and certainly cannot be resolved at press conferences.
In all cases the Government has displayed a willingness to treat with the problems identified and to continue giving every practical support to these sectors.
Government has also tried to secure an understanding from our partners in the Private Sector of the real fiscal limitations which the country faces, conditions that limit the extent to which Government can give up additional revenue beyond what has already been given up, without further eroding government’s ability to meet its commitments.
Government assures all stakeholders and partners that it will continue to engage with the representatives of the Private Sector and widen the engagement to involve the Small and Micro businesses, which have their own peculiar circumstances.