Rumpundit

Extra burden hurting rum’
Date: Thu, 15 Apr 2010  Barbados Nation

‘Extra burden hurting rum’

Minister of Economic Affairs Dr David Estwick (right) and managing director of Foursquare Rum Distillery, Richard Seale, watching bottles of rum roll off the conveyor belt at the factory yesterday. In the background is executive director of the Barbados Manufacturers’ Association, Bobbi McKay. (Picture by Kenmore Bynoe.)

Published on: 4/15/2010
Barbados Nation

HEAVY Government monitoring of the rum industry is proving costly and counterproductive.
This charge was levelled yesterday by managing director of the St Philip-based Foursquare Rum Distillery, Richard Seale.
Seale told reporters that meeting “salaries and incidentals” for customs officers posted at the plant “to make sure that the Excise Tax is collected” was high and could run into $100 000 yearly.
He also complained that having to seek customs permission “with every step” of the operation ran counter to the plant’s efficiency and productivity.
Seale, son of businessman Sir David Seale, raised the issue with Minister of Economic Affairs Dr David Estwick during a tour of the Distillery & Heritage Park yesterday morning.
It was the first stop in Estwick’s tour of distilleries to familiarise himself with rum production, its triumphs and challenges.
Seale told reporters the rum industry was saddled with “an ancient method” of supervision and collection of Excise Tax that the beer and oil industries did not face.
“We don’t need a handout; we just need a level playing field, and one of the problems is that we are stuck with an Excise Tax legislation, or Spirits Act, which basically has the historical anomaly of very heavy supervision,” he told reporters.
“We exist in a modern environment of indirect taxation like VAT (Value Added Tax), and yet we still have an ancient method of supervision and collection for Excise Tax.
No one else
“The irony is that we have one of the most important industries subject to an extra burden that no other industry has to face.”
According to Seale, customs officers had to supervise rum-making “from production in the still right through to the bottle”.
Essentially, what the officers were doing was making sure that the Excise Tax was collected, he explained.
“But the irony is that the VAT on rum is even higher than the Excise Tax, but there is nobody supervising the VAT,” he pointed out.
“There is nobody, for example, supervising the Excise Tax collection on beer. There is nobody supervising the Excise Tax collection on oil and gasoline.
“It is only rum, and the only reason why rum has this historical anomaly is because it is the first industry to collect Excise Tax. So you have this legacy, and therefore you have to pay these extra costs for the supervision.”
According to Seale, “you need customs permission to simply carry out blending of rum”.
It meant that the important rum industry “has to operate with one hand tied behind its back all the time”, Seale complained.
“Our position is: just make us equivalent to the rest of the other industries that are subject to the Excise Tax or explain to us why rum for some reason has a higher risk,” he added.