Property owners to pay significantly moreBy Lynford Simpson, Staff Reporter
Local Government Minister, Arnold Bertram, addresses Parliament yesterday. - Rudolph Brown/Staff Photographer
JUST LESS than 500,000 customers of the Jamaica Public Service Company (JPSCo) will, on April 1, begin paying a 3.14 per cent cess to offset the company's cost of providing street lighting. On the same day, property owners will begin paying significantly more property taxes.
The announcements were made in the House of Representatives yesterday by Local Government Minister Arnold Bertram.
"One advantage of financing this service (street lighting) with a cess is that it is paid directly to the service provider (JPSCo) and dedicated to meet the charges for street lighting purposes," Bertram said. He said this method allowed for public accountability and transparency.
The Minister, in seeking to justify the increases, pointed to the massive $565 million debt chalked up by the parish councils last year for the 76,199 street lights islandwide. He said the amount collected for property taxes in 2001 was not enough to pay for street lights and to undertake the other functions provided by the parish councils, such as solid waste management.
Property tax collection for 1998/99 totalled $475.9 million; $540 million in 1999/2000 and $603.9 million for 2000/2001.
The inability to pay the half-a-billion dollar annual bill aside, the local authorities were also unable to respond to the growing demand for street lights, Bertram said.
JPSCo's large industrial customers in the Rate 50 class will be hardest hit by the cess. The group which numbers 98, has an average monthly bill of $2.34 million for some 422,057 kilowatt hours of electricity consumed. The monthly levy would be $73,506.
Rate 40 customers in the large commercial and small to medium industrial category have an average monthly bill of $224,742. A monthly charge of $7,057 will be levied on the group which numbers 1,320 customers.
Residential customers classified as Rate 10, make up the bulk of the JPSCo customer base, numbering 442,592. With an average monthly bill of $1,527 for 200 kilowatt hours of electricity consumed, residential users will be charged an additional $37.
The current $565m debt will be cleared by the Ministry of Finance.
Although slated to come into effect on April 1, the cess becomes applicable as soon as Parliament amends the Electric Lighting Act.
Mr. Bertram explained that the 3.14 per cent of the total bill charged to each customer can be modified on the application of the licensee (JPSCo) to the Office of Utilities Regulation (OUR) which will be empowered to approve, alter or amend the application.
The JPSCo will be obliged by the Act to prepare and submit a monthly statement of accounts to the Local Government Ministry. Money collected by way of the cess will be used to finance an expansion of street lights islandwide, 25,000 of which will be installed over the next three years.
"I want to make it clear that this expansion will begin this year so that between April 2002 and March 2003 an additional 7,600 street lights will be installed ... with a special focus on rural communities," Bertram said.
He said the expansion would not only satisfy current demand but correct the traditional bias against rural communities.
The announcement of the cess was first made by Prime Minister P.J. Patterson on Monday when he addressed reporters at the weekly post-Cabinet press briefing at Jamaica House. He was at pains to explain the new tax in light of an earlier announcement by Finance Minister Dr. Omar Davies that there would be no new taxes in the upcoming Budget.
"The Minister of Finance ...is not coming with any proposals on the fiscal side that will be seeking to generate additional revenues for the Central Budget. This does not mean that in respect of the charges for services we would not have to make some adjustments," Patterson said.
Yesterday, Betram opened his presentation by pointing out that he would not be able to: "Emulate my colleague, the Minister of Finance. For whereas he will not be introducing any new taxes payable to the Consolidated Fund, local authorities need the increases in revenues for this fiscal year 2002/2003 in order to deliver at an acceptable level the services for which they are responsible."
Meanwhile, property taxes which were last increased in 1992 although the law allows for an adjustment every five years will be hiked effective April 1.
Property taxes are paid by the owners of 670,000 parcels of property and are used to fund a range of services. However, of this number, 125,000 are reportedly paying $4 per month while another 381,000 pay $8 per month. Despite the low charges, compliance rate was a low 45 per cent.
"There is no way around increasing property tax revenues," Bertram said while pointing out that the projected $604 million for the fiscal year 2001/2002, inclusive of $200 million arrears was inadequate to fund the range of services provided by the local authorities.
Based on the proposed increases, the owners of about 120,000 parcels of land will be required to pay $100 per month. A full-scale property revaluation exercise is being undertaken by the National Land Agency.
