Bauxite Levy: Standing up to the transnationals
The world oil crisis in 1973, which almost quadrupled Jamaica’s oil import bill from $55 million to nearly $180 million per year, was one of the dominant factors that caused the Michael Manley-led government to take on the transnational bauxite companies and impose the 1974 bauxite levy, according to Dr Carlton Davis, one of the architects of the process.
Prime Minister Michael Manley believed that an increase in the revenue from bauxite would have enabled the country to have enough foreign exchange to pay its oil bill and also to finance ‘free education’, Dr Davis explained.
“It was quite an order because you were dealing with four of the world’s biggest aluminium companies, Alcoa, Alcan, Kaiser, and Reynolds,” Dr Davis recalled.
According to him, one of the arguments made by Mayer Matalon, another architect of the process, was that the bauxite was valuable at the time and Jamaica shouldn’t settle for deals which stated ‘I’ll pay you something if you make a profit.”
In May 1974, Manley announced that the country would repeal previous agreements and imposed a 'production levy' on all bauxite either exported from or processed in Jamaica.
The levy was set at 7% per cent of the selling price of aluminium ingot. “The first year alone we increased the revenues that we were getting from US$25 million to about US$180 million and it allowed the government to do a number of things, including what Manley had announced as the free education for our students going to tertiary institutions,” Dr Davis recounted. “Education became an important aspect of our development. We now have a much more alert population because you have a lot more people who understand things in a way that they did not before.”
According to him, other financial benefits that came from the bauxite levy included the Emergency Impact programme, dubbed the ‘crash programme’, but the message sent to the rest of the world by standing up to the transnationals was unimaginable.
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