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Gas tax rollback - Government cuts petrol prices, PNP calls off protest

Published:Tuesday | April 12, 2011 | 12:00 AM

Edmond Campbell, Senior Staff Reporter

THE BRUCE Golding administration yesterday rolled back the rate of ad valorem tax on fuel at the eleventh hour from 15 per cent to 10 per cent, effective Thursday, in an apparent bid to ward off national protests.

Following a marathon meeting of Cabinet, the Government stated that the temporary reduction in the gas tax would lower petrol prices by between $4 and $5 per litre.

The Opposition People's National Party (PNP) yesterday signalled that it would take to the streets if the Government did not respond to calls by various interest groups to cap the tax on fuel.

Late yesterday evening, the PNP said it would "stand down" on the originally planned protest action but would continue its advocacy on behalf of Jamaicans for a permanent cap on the gas tax, as well as the removal of the general consumption tax on electricity.

For weeks, groups such as the Jamaica Gasolene Retailers' Association and the Micro, Small and Medium Enterprises Alliance have been calling for the capping of the ad valorem tax on petrol.

However, the administration said the reduction of the ad valorem tax was a temporary measure aimed at cushioning the impact of rising world market oil prices on local consumers. It said this would be reviewed on a quarterly basis, in keeping with changes in world oil prices.

"In taking this measure, the Government has rolled back and reduced the tax take on fuel to what it was when the price of oil on the world market stood at US$80 per barrel," a release from the Office of the Prime Minister stated.

The Golding administration pointed out that the increases in the price of fuel were being driven by the price of oil on the world market and not by taxation.

In its release, the Government said the decision to roll back the tax on petrol effective ahead of the presentation of the new Budget was in the interest of continued economic stability.

Late yesterday evening, tension was building over the inflammatory ad valorem gas tax issue. At that time, the PNP signalled that it was going full speed ahead with protest action in major towns across the country.

The Opposition had sought support in its protest from various groups such as bus and taxi owners, drivers, haulage contractors, and petroleum dealers.

Prior to the administration's rollback of the gas tax, a number of sectors, including trade unions, urged the Government to ease the burden on Jamaicans as the price of oil on the international market soars.

Wayne Jones, president of the Jamaica Civil Service Association (JCSA), said the executive committee of the association would today examine the matter at its monthly meeting.

He told The Gleaner yesterday that the skyrocketing petrol prices and the ad valorem tax were having a significant negative impact on thousands of public-sector workers.

"The Government needs to take urgent action to relieve Jamaicans of the pressures that are brought on by the constant increase in oil prices and the attendant inflation in the prices of goods and services that affect, in particular, the poorer people of the working class," Jones pointed out.

The JCSA head insisted that there was need for a review of the tax. "It's a direct tax on the people, even though it is not being taken directly from their salary, because they must eat and they must travel and buy other services, and so to that extent, we believe the Government needs to reduce its take from the gas tax to bring some relief to the people," Jones added.

Audrey Lecky, president of the Bakers' Association of Jamaica, wants the Government to immediately place a ceiling on the gas tax.

"The gas tax affects bakers in two ways. It affects us in our production, and it affects us with our delivery. Every week, I face an increase in the cost on the road when the delivery is made," she complained.

While expressing support for a capping of the gas tax, president of the Jamaica Manufacturers' Association, Omar Azan, urged the Government and the Opposition People's National Party to have urgent dialogue on the matter.

"Fuel prices do not affect the PNP or the JLP (Jamaica Labour Party); it affects every Jamaican living in this country. What I would want to see is more dialogue and consensus on something of this nature so that we can look at protecting the people of this country."

Milton Samuda, president of the Jamaica Chamber of Commerce, urged that the issues related to the gas tax be taken to the Partnership for Transformation for "urgent and immediate resolution within the context of comprehensive tax reform".