Cooking The Goose

Groundins

By: Charles H.E.Campbell

In his column, Legal Notes, in the Business Observer of Wednesday, May 13, 2009, Gavin Goffe of Myers, Fletcher and Gordon addressed the issue of GCT on entrance fees for events- the ‘general admission tax’ as he appropriately called it.

Goffe raised some very important points of law, which require a re-examination by the Government of Jamaica (GOJ), if it is sincere in its stated recognition of the entertainment industry as a critical plank of our economy going forward.
He said, “charities [...] especially those that hold annual fund-raising events, could have a liability for failing to charge, collect and pay over GCT on admission fees over the past six years”. Goffe prognosticated that, “if GCT exemption is not allowed, it would deter charities and churches from raising funds by organising events and lead them instead to seeking outright donations, which are not taxable under either the GCT Act or the Income Tax Act.”

In reference to all-inclusive parties, Goffe went on “the organisers of high-profile, ‘everything-included’ (except the GCT) summer parties [...] fall squarely within the Act as providing a taxable service. The promoters’ liability to charge GCT is not limited only to the admission fees, but possibly also the promotional/sponsorship deals that they have entered into.”

Overheads for staged events in Jamaica are disproportionately high, in comparison to developed societies, because of the lack of appropriate venues, such as amphitheatres and multi-purpose complexes for large outdoor events and theatres and concert halls for indoor events. Thus live events in Jamaica require significant temporary infrastructure and technical production equipment. Furthermore, events in Jamaica are prone to be adversely affected by any number of variables including the vagaries of weather and other Acts of God, demonstrations, riots, gang violence, curfews and special state security operations.

By its very nature, therefore, the business of promoting live events is fickle and of extreme high risk in comparison to other sectors of the economy. When an event is postponed or cancelled, a significant amount of pre-production expenses have to be written off, while as a general rule, contractual agreements with suppliers and service providers must still be fulfilled. If affected by any of the above, the company will sustain heavy losses.Given the nature of the event industry, a promoter can only estimate the potential of his patronage, and will print tickets according to this projection. Where printed tickets for an event are not sold, they have no monetary value after the expiry of the event.

The entertainment product itself is highly expendable and time sensitive- once the date of the event has passed, the product has expired. In this sense, the successful management of an event is more of an art than a science. Special consideration should therefore be given to this sector in the approach to the collection of GCT.
Without sponsorship, most events would not be viable or profitable and in many cases, inadequate promotions due to lack of sponsorship lead to substantial losses for event promoters and executive producers. When GCT has to be paid out of sponsorship funds, it undermines the very purpose of sponsorship, in aiding to cover the overheads, which gate receipts and other sales cannot compensate for, in our small economy.

Now, it is rumoured that the Taxpayer Audit and Assessment Department (TAAD) intends to target and assess promoters for GCT collections based on the number of tickets printed or the capacity of the venue, and even to collect this prior to the staging of the event. Firstly, in producing a function in Jamaica, the capacity of the venue does not directly or necessarily relate to the concept, design and projected or actual attendance. Secondly, promoters are not able to access project financing through the banking system and therefore pre-production cash flow has to be sponsored or self-financed. In many instances, sponsorship funds committed to events are not paid over until after the event.

Thus, to pay over GCT prior to the event and even before tickets are sold, would drastically erode the event’s pre-production cash flow which may make the event unfeasible or even impossible. The most accurate, scientific and ethical method of assessing GCT is on actual tickets sold. If the TAAD strictly implements these policies, it would be the death knell of the industry. As the Jamaican proverb says, “dem goose (woulda) cook.” In the short term, the GOJ may get a windfall in taxes, but in the long run, they would be killing the goose that laid the golden egg.
Conversely, if the sector is to increase event admission prices by 16.5%, it will lead to a reduction of audiences across the board, because entry fees to events, given the cost of overheads, is already high. Such an increase will put many entertainment products out of the reach their target audiences and lead to a lowering of production standards, inferior entertainment products and ultimately a drastic downturn in the industry.

Registered companies in the events branch of the entertainment industry, which possess a current Tax Compliance Certificate (TCC), should not be treated differently from other companies operating in the Jamaican economy, as it relates to the collection and payment of GCT. In every other sector, companies are allowed to offset input expenses against GCT collected on behalf the GOJ on the sales of their goods and services. Rather than targeting a particular event for the collection of GCT, the event production company should be allowed to go through the natural annual cycle and pay GCT on their net sales for the year.

In my view, the government should be going in the opposite direction. Event companies should be allowed to offset the losses incurred from one event, by profits earned from proceeding projects in any given fiscal year. Further, GCT calculated on sales for functions should not be applicable and calculated until the event has broken even.

Email: che.campbell@gmail.com

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Dreams Do Come True

Groundins

By: Charles H.E. Campbell

All of us as children are taught as a motivational tool by our parents and teachers that if we work hard, dreams do come true. In addition to this, those generations that came of age between the 1940’s and 1970’s were also taught, and in significant numbers were involved in some form of volunteerism- helping to organise socially uplifting or charitable programs and deeds. This engineered and engendered a gradual transformation of our social landscape and structure. Professor Rex Nettleford refers to this as the ‘smaddification’ of our Jamaican society.

These generations recognised this to be a critical task in the formative phase of the process of nation building. To them, it was imperative for us to pull ourselves up, from the hovels and ghettos, by our own bootstraps. Organisations like Jamaica Welfare, Jamaica Agricultural Society, Jamaica Teachers’ Association, as well as church groups including the Anglican Women’s Auxiliary, the Roman Catholic Social Action Centre and Christian Youth Organisations, Mico Teacher’s College, Young Men’s Christian Association (YMCA) and Young Women’s Christian Association (YWCA) played a leading role in the process of social integration.

During this era, they concentrated on skills training in the traditional trades, but more importantly, incubated indigenous entrepreneurs and cottage industries. The end result was the development and grooming of future leaders in the social, economic and political spheres. One such institution was the Alpha Boys’ School, which trained underprivileged and wayward youths- not only as musicians, but as well-rounded individuals who went on to master the playing and public performance of American jazz and rag music in the big bands which entertained sailors and the society’s upper crust at clubs and hotels, mainly located in the eastern end of the city.

Simultaneously, up in Wareika Hills, a group of Rastafarian, intuitive musicians led by Count Ossie had regular jam sessions using African-inspired religious and traditional beats and tunes. Ernie Ranglin, already a seasoned musician, regularly participated in these sessions. A core of these Alpha trained musicians, including Don Drummond, Roland Alphonso, Johnny ‘Dizzy’ Moore, Tommy McCook, Lester Sterling and Lloyd Knibbs, with a conscious urge for self-expression, and drawn by their cultural roots, found this camp to be their ideal crucible for their musical experimentation and self-definition. Out of this, our first modern musical genre called Ska was born, incorporating jazz, blues, Mento and Nyahbinghi, with an underlying Latin influence.

These musicians had a dream and although many of them did not live long enough to reap financial or symbolic awards, they were the builders and Ska became the foundation, the cornerstone on which we have built an entire industry. Other than those musicians referred to above, who were all fiercely patriotic, no one then, could have foretold the incredible spread and impact that Jamaican music and culture would now have on the entire world.

The next generation of musicians and artistes led by Millie Small, Desmond Dekker, Prince Buster, Derrick Morgan, Jimmy Cliff, followed by Burning Spear, Culture, Peter Tosh, Dennis Brown, John Holt, Bob Andy, Marcia Griffiths, Bob Marley, Mighty Diamonds, Gregory Isaacs, U-Roy, Inner Circle and Third World all played their part, at great personal sacrifices sometimes, in propagating our music and culture worldwide.

In the succeeding years, with the emergence of Dancehall as a primary genre, highly influenced by the same pioneering sounds of Ska, Rock Steady and Reggae, deejays like Shabba Ranks, Patra, Shinehead, Beenie Man, Bounty Killer, Sean Paul, Elephant Man, Capleton and Shaggy have pushed Jamaican popular music and culture into new and wider international markets. While other nationalities have profited substantially from its enormous market appeal, unfortunately, to an extent, we in Jamaica have taken this resource for granted and failed to sufficiently protect and exploit the great legacy bequeathed to us by the pioneers. Within the industry, though we all see the bigger picture- the true potential- we are so preoccupied with developing our individual careers and generating income for ourselves and our enterprises, that collectively, we have so far been unable to coalesce around one single project, volunteering our services in the true Jamaican spirit, for the long term interest of the music and the nation. They say however, it’s never too late for a shower of rain.

Finally in 2008, the government of Jamaica declared February as Reggae Month in Jamaica. It now behoves all the players in the entertainment industry, to come together in a common cause, to take the ball and run with it. Reggae Month should be treated as the launch of our annual cultural calendar.

Jamaica is already seen as the cultural mecca of the Caribbean. It is famous for grand, outdoor events and festivals like Sting, Jamaica Jazz and Blues, Rebel Salute, Reggae Sumfest, ATI/Negril Dream Weekend, Jamaica Carnival, Little Ochi Seafood Fest, Yam Festival, Portland Jerk Festival and Jamaica Festival and Independence celebrations, to name just a few. Popular street dances like Passa Passa, Bembe and Rae Town have their own unique appeal, as do parties and sessions like Good Times, Mello Vibes, Osmosis, Yush, French Connection, Fully Loaded, Luau, Frenchmen and Renaissance signature soirees.

Now, in addition to Doctor’s Cave Beach, Dunn’s River Falls and the Blue Mountains, we also boast internationally renowned attractions like the Bob Marley Museum, the National Gallery and Trench Town, the so called birth place of Reggae, because so many of our artistes resided there early in their careers. Recording studios such as Studio One, Harry J, Tuff Gong, Dynamic Sounds, Big Yard and Anchor are legendary for the artistes and international hits recorded. Some of the most dynamic night clubs in the Caribbean operate right here in Jamaica, including the Quad, Amnesia, Jungle, Bourbon Beach, the Deck, Waterfalls and recent additions, Fiction and Pure/Plush.

By putting the focus on Reggae Month, if properly planned, organised and promoted, it will give us the perfect launching pad for marketing all of these entertainment ventures and products to the world, raising the profile of Jamaica as a premier destination for leisure, entertainment and cultural and heritage tourism.

Happy birthday, Ele. Walk Good, Steelie. Job well done- Reggae/Danchall will forever be in your debt.

Email: che.campbell@gmail.com

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