The JCA’S contribution to the GOJ’S tax revenue remains robust: entity continues to perform effectively

A principal objective of the Government of Jamaica’s (GOJ) revenue strategy is the reform of the tax system to achieve simplicity, efficiency, and equity. The improved tax system is expected to ensure revenue adequacy and to facilitate a more competitive business environment that promotes sustainable economic growth and development. The Jamaica Customs Agency (JCA) plays a pivotal role in the achievement of this revenue objective. As part of its mandate, the JCA equitably collects the revenue due from international trade and travel.

As at December 2022, $213.0B in tax revenues for the current fiscal year was generated from international trade and travel. Comparatively, this inflow surpassed the prior year’s tax revenue outturn of $169.3B by $43.7B or 25.8%. Additionally, the current year to date tax revenue exceeded the pre-pandemic outturn of $165.2B by $47.8B or 29%.

Historically, year on year growth in revenue averaged 11% and was driven largely by changes in the volume and value of international trade and accentuated by new revenue measures to include an increase in the Special Consumption Tax (SCT) payable on fuel, alcoholic beverages and cigarettes, broadening the General Consumption Tax (GCT) and Environmental Levy (ENVL) base as well as increasing the Travel Tax rate and denominating same in United States Dollars which further solidify the GOJ’S commitment to fiscal consolidation.

However, in the absence of new revenue measures, spanning the period FY2018/19 to FY2022/23, the historical average growth rate in revenue was 5%. At this rate and holding macroeconomic variables constant, the receipts-based revenue projection model, estimated the tax revenue for April to December 2022 at $191.3B; $21.7B or 11% below the current outturn. The Covid-19 pandemic and the attendant implications for the cross-border movement of people and cargo has certainly changed the JCA’S revenue growth trajectory. The revenue statistics revealed a strong recovery in international trade inflows and importantly, demonstrated the resilience of the Jamaican economy. The outturns for all tax revenue items exceeded both the immediately preceding year as well as the pre-pandemic year with the consumption taxes recording the strongest performance year on year. In terms of contribution to the total tax revenue outturn, between 2022 and 2021 the Import Duty item remained firm at 22%; a one-percentage point improvement over 2019 where the registered contribution was 21%.

The GCT item maintained its dominance, accounting for 42% of the total tax revenue for 2022. However, this contribution was two-percentage points below the 44% recorded for 2021 and also one-percentage point below the 43% recorded for 2019. The change in contribution was driven largely by the continued fiscal support provided by the GOJ to productive sectors.

Like Import Duty, the SCT’S contribution remained unchanged at 24% between 2021 and 2022 but improved a one-percentage point from the 23% registered for 2019.

The Travel Taxes, which traditionally accounted for 10% of the tax revenues, recovered from a low of 3% in the height of the Covid-19 pandemic to 6% in 2021 and now stands at 9% in 2022; recovery that could be attributed to the reopening of the borders to passengers as well as the entertainment sector.

Aggregately, at the macrolevel, the JCA’S contribution to the total GOJ’S tax revenue remained robust and unchanged at 41% between April to December 2021 and 2022. Prior to the onset of the pandemic, this contribution, over the nine-month period ending December 2019, stood at 40%.

Likewise, the ratio of tax revenue from international trade and travel to Gross Domestic Product (GDP), using the available data as at September 2022, remained unchanged at 11% when compared with the first two fiscal quarters of 2019 but improved a two-percentage points, relative to the same period of 2021.

Bold reforms or operational improvements, driven by evidencebased decisions, coupled with strong recovery in economic activities may have contributed to the recovery in international trade revenues. Additionally, the impact of higher commodity prices, unprecedented