KINGSTON, Jamaica—Jamaica’s manufacturing sector faces a significant competitive disadvantage following the government’s decision to expand the Environmental Protection Levy to cover 100% of manufacturers’ sales value. The Jamaica Manufacturers and Exporters Association (JMEA) has issued a stark warning that this fiscal measure, introduced as part of the 2026/27 budget package, could inadvertently strengthen imported goods while undermining domestic production.
The policy shift, projected to generate approximately $3.6 billion in additional revenue for hurricane recovery efforts, eliminates previous adjustments that partially mitigated the levy’s disproportionate impact on local manufacturers. Previously applied to 75% of manufacturers’ sales—reflecting typical import markups—the expanded levy now subjects local producers to full taxation on their final sales value, while imports continue to be taxed based on pre-markup port entry values.
JMEA President Kathryn Silvera emphasized that this constitutes more than a technical adjustment, fundamentally altering the competitive landscape. “At a time when Jamaica needs to strengthen domestic production and expand exports,” Silvera stated, “policies that penalize manufacturers move the economy in the wrong direction.”
Industry analysis indicates the increased levy will elevate production costs, compress profit margins, and diminish export competitiveness, potentially triggering higher consumer prices. The manufacturing sector plays a vital role in Jamaica’s economy through value-added exports, employment generation, and extensive linkages with agriculture, logistics, and service sectors.
The concerns emerge as the government seeks to mobilize $29.6 billion through various tax measures to address Hurricane Melissa’s devastating impact, which caused approximately US$8.8 billion in losses equivalent to 41% of GDP. While acknowledging fiscal necessities, the JMEA maintains that tax design critically influences economic outcomes.
Silvera argued that short-term revenue gains might come at the expense of long-term economic vitality: “Increasing the Environmental Levy on manufacturers may raise revenue in the short term, but it risks weakening the very sector that generates jobs, exports and economic growth.”
The association advocates for policy reconsideration, recommending maintained levy discounts for manufacturers, export exemptions or deferrals, and careful calibration of environmental taxes to avoid unintended damage to productive sectors. “Jamaica cannot build a resilient economy by taxing the industries that create wealth,” Silvera concluded, urging growth strategies that support rather than hinder production, investment, and export competitiveness.