Cañeros say concessions good for American ASR, but only “making the rich richer and the poor and enterprising cane farmers poorer!”
“We were facing Armageddon” said Barrow
The House of Representatives today passed a bill which the ruling United Democratic Party argues is necessary to rescue the sugar industry from sure demise, while guaranteeing long-term prosperity for the farmers; however, the bill has been a hard sell to the Belize Sugar Cane Farmers Association, which wrote Prime Minister Dean Barrow yesterday objecting to concessions which they claim would give American Sugar Refining (ASR) an unfair advantage over the country’s over 6,000 cane farmers.
Prime Minister and Minister of Finance Dean Barrow said in Parliament today, while introducing the bill, that the concessions are in support of a US$100 million investment in the Belize sugar industry by ASR—which he described as a company with the largest global footprint on that market and the biggest refiner in the world—as a part of a rescue operation of the financially beleaguered Belize Sugar Industries (BSI).
Barrow made the case that the passage of the bill today—taken through all its stages in a single sitting of the House—is urgent, because BSI only has until the end of September to settle US$60 million in debt, the bulk of it with the foreign bank, ING, which last year gave the BSI a one-year extension to settle its bill or face foreclosure.
However, with the injection of US$60 million to settle the debt and another $30 million to expand the factory and provide capital to farmers, ASR would, in turn, get a controlling stake in BSI: 78% shareholding, according to Barrow. Currently, workers own over 80% of the factory, but the issuance of new shares to ASR will change that substantially. Government, Booker Tate and BSI workers would together hold minority interest of 22% once the deal is finalized, the Prime Minister detailed.
In introducing the bill for the tax concessions this morning, Barrow, who said it is a “win-win situation,” told Parliament: “We were facing Armageddon,” and along came ASR to the rescue. “Without this deal,” said Barrow, “the industry would have collapsed.”
Whereas he couched it as “the best deal for Orange Walk and Corozal [farmers] imaginable,” cane farmers themselves are not so convinced.
“These exemptions are making the rich richer and the poor and enterprising cane farmers poorer,” said a statement released today by the Committee of Management of the Belize Sugar Cane Farmers Association, based in Orange Walk Town.
The BSCFA said that the introduction of the Sugar Industry and Cogeneration Project (Development Incentives) Act 2012 by the Prime Minister to the House does not represent an act of good faith towards the BSCFA and its members for two basic reasons: The association said farmers were not consulted. They also lament that the Government has refused to give them the sorts of “sweets” it is giving to ASR.
“However, the BSCFA is particularly concerned about Section 8 of the Bill, which gives BSI the unrestricted right to export raw sugar and molasses for a period of ten years with effect from September 1, 2012,” said ASR. Instead, the cane farmers want a committee to control the exportation.
As for the details of the proposed concession, the bill brought before Parliament calls for an expansion of tax discounts granted to the sugar factory by the People’s United Party administration of 2003-2008. The original act took effect in 2005; this new one would be retroactive to 2008. Barrow said that the retrospective date of the bill is to settle a tax dispute the government had with BSI dating back to 2008 and originating out of the same 2005 concession. The new law would grant business tax exemption for a further two years and exemptions on business tax spanning to 2016. The business tax rate has been reduced for 2012-2013 to 20% as opposed to 33%, and from 2013-2014 BSI and BELCOGEN will pay 40% tax as opposed to 66% tax. They will pay that 40% for three years until 2016. Meanwhile, taxes on dividends are proposed to be trimmed by 4 years to 2018. Further adjustments are proposed for import duties, environmental tax and stamp duty exemption.
Florencio Marin, Jr., PUP Corozal Southeast Area Rep, said that “observers” have calculated the loss of revenue to the Government at between $40 million to $50 million.
Starting with Orange Walk Central area representative Johnny Briceño, the Opposition highlighted the concerns of cane farmers, asserting their view that the “excessive” concessions create an uneven playing field that would give ASR “an unfair advantage.”
PUP Orange Walk South rep, Jose Mai, said, “I myself am a cane farmer.” He charged that BSI had been grappling with financial trouble because of excessive spending by company executives and bad management. He said that he does not believe BSI is worthy of the concessions.
Opposition Leader Francis Fonseca said that cane farmers fear being displaced from the industry by ASR. (Amandala readers will recall that the cane farmers had also proposed a buy-over of BSI; however, those talks never got very far.)
Fonseca said that cane farmers are calling for proper consultation before the bill becomes law and they are also calling for equal treatment.
“This is one time you need to listen,” he told the members on the other side of the House.
Ex-prime minister Said Musa, PUP rep for Fort George, argued in Parliament that the 2012 concession being proposed by the Barrow administration gives much wider concessions than the 2005 concession granted under his administration. He said that if the ASR deal is “so sweet for Belize,” why have the cane farmers detailed the “deep concerns” they have in their letter to the Prime Minister yesterday?
The BSCFA has said, via its statement, that although it welcomes the opportunities which ASR brings for expansion in the cultivation of sugar cane and the production and sale of sugar and molasses and the generation of electricity from cane bagasse, the cane farmers need much more relief from the Government.
They added that “…repeated requests by BSCFA to the Government of Belize for meaningful assistance or tax exemptions in these areas have either been ignored or fallen on deaf ears. However, the income of our cane farmers will continue to be taxed, while BSI’s and BELCOGEN’s income and dividends will not be taxed.”
According to the cane farmers, “BSI and BELCOGEN will pay no taxes on its income and business for the period 2008 to 2012, and reduced income and business taxes for the period 2013 to 2016. BSI and BELCOGEN will also pay no taxes on dividends and technical services for a period of five years, and no taxes on interest payments to non-residents of Belize for a period of ten years. BSI and BELCOGEN will pay no customs and excise duties, no environmental tax and fifty percent (50%) of stamp duty for a period of ten years. BSI and BELCOGEN shall also be exempt from all (foreign) exchange control restrictions for ten years.”
Barrow, in wrapping up today’s debate in Parliament, maintained that the concessions that had been tabled don’t hurt cane farmers, and he went on to say that Government gives similar concessions to investors on an almost monthly basis.
Early in his remarks, he entered a cross-floor exchange with a leading Opposition member, saying “shut up.” Protesting what they deemed to be a show of disrespect, the PUP collectively walked out of the National Assembly, their supporters in the gallery following the cue of the parliamentarians on the Opposition side. That happened at about 1:20 p.m., before the third reading of the bill.
Barrow said that the Opposition’s comments were meant to torpedo the bill, which he maintained is in the best interest of cane farmers and the industry.
Barrow asked: “If not this, then what?”
The bill goes next to the Senate for ratification before it is sent over to the Governor-General for his assent and passage into law.