Roll back oil hedge tax - Paulwell
Arguing that the price of fuel on the local market has skyrocketed to its highest level, Opposition Spokesman on Energy Phillip Paulwell has urged the Government to provide reprieve for consumers by rolling back taxes now being collected for an oil hedge that no longer exists.
A hedge is money paid in advance to insure against future spikes in the cost of oil.
Paulwell was making reference to a tax that the People’s National Party administration introduced three years ago to pay for oil-hedging contracts when the price of crude oil was projected to rise sharply.
The oil-hedging contracts had expired and had not been renewed. The tax was expected, at the time, to rake in $6.4 billion to defray the hedging cost. A tax of $7 per litre was imposed on petrol sales.
“Give them back this money for the hedge,” Paulwell told government members of parliament in Gordon House yesterday.
“I am again urging the Government that we look at the cost structure of fuels, and in particular of the hedge money that has been collected on the basis of providing insurance for the consumers, which insurance is not in place.”
He reasoned that if the price of a barrel of oil “goes to US$80 tomorrow (today), the Jamaican consumers would not be protected and have to pay (the hike)”.
Paulwell said that the Public Administration and Appropriations Committee (PAAC) explored the pricing element of fuel at the state-run Petrojam, at its meeting last week and discovered that nearly 50 per cent of the price represents government taxation, including the hedge tax.
“The Government should seriously contemplate this matter of the hedge and return those funds to the coffers of the Jamaican people so that at least it can be used to offset the price of fuel,” he stressed.