Sun | Jan 22, 2017

EDITORIAL - JPS GCT bungle

Published:Sunday | January 3, 2010 | 12:00 AM

In the context of the Government's Christmas tax package of $21.8 billion, $118.5 million is not a lot of money - less than one per cent of the total.

That, on the face of it, is the amount the Government will forgo because of the expected two-month delay by the light and power company, Jamaica Public Service (JPS), in implementing the 10 per cent consumption tax on its customers who consume more than 200 kilowatt hours of electricity monthly.

We do not assume that this will break the bank and severely compromise the administration's fiscal programme. It, however, raises significant questions about the quality of the leadership at the finance ministry and our ability to repose confidence in it.

We start with the assumption, unless we are credibly advised otherwise, that JPS has no interest in sabotaging the Government's taxation programme and that the company's claim that it needs time to adjust its computer systems and management programmes to accommodate the general consumption tax (GCT) is genuine.

"We are still in discussions with our software vendors on the best way forward," said the company's spokesperson, Winsome Callum.

This relatively minor hiccup has, however, to be considered in its broader and fuller context - a consistent bungling on tax and fiscal policy during the current fiscal year, exacerbated by the display of poor judgement in the deployment of technical staff at the finance ministry by Minister Audley Shaw.

tax package

At the presentation of his Budget last April, Mr Shaw brought an $18-billion tax package, inclusive of an imposition of GCT - the normal rate of which was then 16.5 per cent - on a wide range of goods and services that were previously zero-rated or exempt. There was a public outcry and great confusion over what ought or ought not to have been on the new list. Eventually, the Government abandoned the effort.

Mr Shaw's later supplementary Budget was to have adjusted the Government's spending and broader fiscal programme to cushion the slump in the domestic economy, triggered, in part, by the global recession. The effort proved inadequate, a contributory factor being, no doubt, a weakness of the technical team at the finance ministry, the result of Mr Shaw's mostly soft appointments when he became minister.

Now, as a precondition for US$1.2 billion of International Monetary Fund credit, Mr Shaw last month unveiled his new tax package, in which he not only raised the normal rate of GCT by one percentage point but broadened its coverage to many of the items from which it was abandoned in April. Another outcry and another retreat - except from consumers over 200kwh of electricity, although the GCT rate was lowered to 10 per cent. About 160,000 JPS customers are to be affected.

confidential discussions

We would have assumed that prior to announcing the measure, the authorities would have had confidential discussions with the top leadership of JPS to determine the technical requirements for implementing the tax, or to have acquired that information from some other credible source. Instead, there appears to the public to be another round of bungling. If Mr Shaw is not asking himself the question, Prime Minister Golding must be seriously contemplating the minister's capacity for the portfolio. Dr Wesley Hughes, the financial secretary, must also defend his role in the most recent tax-policy fiascos.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.