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Opposition raises fresh concerns about potential impact of tax measures

Published:Tuesday | June 14, 2016 | 6:47 PM
Opposition Spokesman on Finance Dr Peter Phillips.

The opposition has raised fresh concerns about the potential impact of the tax measures announced last month by the Finance Minister Audley Shaw on the cost of living.

It follows yesterday's announcement by the Jamaica Public Service Company that electricity rates will be going up because of the recent increase in the Special Consumption Tax on heavy fuel oil among other reasons.

SEE THE OPOSITION'S FULL STATEMENT BELOW:

The most recently announced movement of the cost of electricity by nearly 13 per cent this month and the upward movement of petrol prices of nearly 40 per cent at the pump since the imposition of the new tax threshold is more than self-fulling prophesies.

The People’s National Party as an Opposition had asked and again asks.

How can the imposition of the increase in the Special Consumption tax (SCT) on heavy fuel oil (HFO) and LNG used to produce electricity not result in the increased cost of the commodity?

How can transportation cost not be impacted by the $7 per litre increase tax on fuel? How can the manufacturers and service providers, which must use energy for production, remain viable and competitive without passing on the increased to the consumer?

In the PNP’s opinion, it is simple arithmetic, but unfortunately the only individuals who failed to acknowledge this inescapable reality was the new government.

We as a the people’s guardian vividly recall that following the introduction of the new tax measures that Finance Minister Audley Shaw gave the assurance that the tax measures would not apply to JPS at all, as it was only related to SCT for fuel for road transport.

Regrettably for the people of Jamaica, the cold economic facts have now overtaken political rhetoric.

To compound matters, the cost of crude oil is inching upwards and is likely to become the trend over coming months. In addition, despite the healthy state of the country’s net international reserves, the pressure on the dollar continues unabated and since February 2016.

Arguable, this reflects a lack of confidence in the economic direction of the country and the resultant inflationary expectations.

The PNP also warned that the depressed oil market was temporary, which is why we as the government then, undertook safeguards and emphasized the need for heightened conservation and energy diversification.

According to the JPS, come this month-end, “residential customers will pay US$0.21 per kWh on average for electricity in June, compared to US$0.19 in May.

This means that the average residential customer using 165kWh of electricity for the month, will see a $500 increase in his or her June bill, which will move from $3,875 in May to approximately $4,372 this month,”

When increased transportation costs are taken into account as some movement have already begun, this could eventually lead to a crippling impact on all Jamaicans, especially those who can least afford it.

The cost of living, which was held at historic lows during the tenure of the past administration, is now being primed for explosion in the very near future and onerous additional taxes are more than likely on the horizon.