No Change on bauxite regime The Ministry of Finance and the Public Service has released green paper no.

1-2011 which speaks to tax reform for Jamaica in an effort to stabilize the economy. However, there was no proposed change as it relates to the existing bauxite regime. The Bauxite (production Levy) Act was established in 1974 by the Michael Manley Administration at a rate of 7.5%. Section 3 of the Act states that a tax to be known as a production levy shall be paid on all bauxite or laterite (soil types rich in iron and aluminium) extracted or won in Jamaica on or after the 1st January, 1974. This was imposed due to the high level of the production of bauxite at that time which would generate greater national benefits from the bauxite industry and offset the increased cost of imported oil. Over the years, bauxite production was considered to be one of the largest merchandise exporter and foreign exchange earner for Jamaica and has been a significant contributor to revenues to the government of Jamaica through the production levy. The levy was later replaced by a fiscal regime based on personal income tax from workers earnings, royalty ($0.50 per ton of bauxite mined) and corporate taxes which gained billions of dollars in revenue for the government. There was a significant downturn in the industry as a result of the global financial crisis such as the price of metal, law of supply and demand, cost and availability of cheaper energy, climate change, and stability of oil producing nations which brought production to a halt as bauxite companies had no alternative but to cut production and staff. In 2009 Bauxite plants such as Alpart, Windalco and Ewarton closed its operations due to this global recession; however, the Ewarton Plant was reopened in 2010. The Budget Presentation Fiscal Year (FY) 2009/2010 by Audley Shaw, MP, stated that there was a major decline in revenue to the government which resulted from the huge fallout in the bauxite sector. The document further stated that the industry earned $5.0 billion in 2007/2008, $4.4 billion in 2008/2009 and was projected to earn only 139 million in 2009/2010 bauxite levy receipts. Due to the large reduction in revenue from the bauxite industry and two plants remained closed, the government had to enter into a US 1.3 billion loan agreement with IMF in 2010 as a means of replacement revenue.

Notes:
The three most important Acts which regulate or influence mining activities in Jamaica are as follows:

(a) The Bauxite and Alumina Industries Encouragement Act (1950/1967/1980) granted import concessions to recognized bauxite producers. These concessions include exemption from custom duties, as well as excise, tonnage and stamp duty. (b) The Bauxite and Alumina Special Provisions Act (1977/1982). This act made it possible to credit income tax against the production levy; the tax is payable in the United States. (c) (c) The Bauxite Production levy Act (1974) imposed a production tax on all laterites (e.g. bauxite)

State how the proposal/measures implemented will enhance the development in Jamaica State whether or not you would support the measures recommended. Be mindful to explain the measures.