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Broken promise - No rollback of GCT on electricity

Published:Friday | May 25, 2012 | 12:00 AM

Daraine Luton, Senior Staff Reporter

THE PORTIA Simpson Miller administration has reneged on its promise to abolish general consumption tax (GCT) on electricity.

Making his opening presentation in the 2012-2013 Budget Debate in the House of Representatives yesterday, Finance Minister Dr Peter Phillips announced changes to the way in which GCT is to be charged.

The minister said that, as of June 1, no GCT will be charged on the first 300kWh of electricity consumed, up from 200kWh. However, the tax will move from 10 to 16.5 per cent. The measure is expected to earn the Government $430 million this fiscal year.

In the general election campaign last year, Simpson Miller declared that her administration would remove GCT on electricity if her People's National Party was elected to form the government. The promise was also contained in her party's election manifesto.

Yesterday, Phillips told the House that of the approximately 500,000 JPS residential customers, 377,000 consume less than 200kwh of electricity.

He said the new tax directives will result in 90 per cent of JPS customers not paying GCT on light bills, up from the initial 76 per cent.

"The proposed measure should relieve approximately 80,000 additional residential customers from the payment of GCT on their electricity bill at the new threshold level of 300kWh, leaving only 52,000 residential customers subject to GCT," Phillips said.

Just last month, Minister of Science, Technology, Energy and Mining Phillip Paulwell said Government intended to honour its election promise to roll back the consumption tax on electricity usage.

"There is a commitment that was given to the people of Jamaica which we intend to fulfil," Paulwell said during a sitting of the House of Representatives.

Proposal questioned

North East St Catherine Member of Parliament Gregory Mair, who had tabled questions of Paulwell in the House, had suggested that the Government seek to raise the threshold to 300kWh instead of rolling back the tax.

Relying on data provided to the House by Paulwell, Mair said only eight per cent of residential consumers would not benefit if the threshold was increased to 300kWh.

"That would mean that 92 per cent of residential consumers would not pay GCT and the total amount of GCT collected would reduce only by $250 million," Mair had argued.

daraine.luton@gleanerjm.com