Wed | Jun 16, 2021

Bad light tax

Published:Thursday | May 31, 2012 | 12:00 AM

Devon Dick, Contributor

Last week, Dr Peter Phillips made his maiden Budget presentation as a minister of finance. The speech was a clear narrative with appropriate illustrations on the micro level about Miss Myrtle.

He also outlined the problem, and showed that a stimulus package was not on the cards and gave us the policy options available to the country. It is crystal clear that the 50th anniversary party will be muted because an International Monetary Fund (IMF) deal is not likely to be in place and the other multilaterals will not give grants, and the international capital markets will not do business with us unless the country has a stamp of approval from the IMF. The challenge is to show an ability to pay our debts.

Additionally, the minister spoke about a trust deficit that has to be regained in the international world. However, he has contributed to that trust deficit by not removing the general coonsumption tax (GCT) on electricity, as promised. It cannot be argued that the People's National Party did not know the dire state of the finances when the promise was made. Because if that was so, it would have been an irresponsible promise to make when one does not know the true state of affairs.

How come?

Furthermore, the intention was never to garner more taxes from electricity usage, so how come the taxpayers are asked to pay additional taxes amounting to $240 million? This is unreasonable. At the very least, the Government should have raised the threshold to 300KWH and leave the GCT at 10 per cent so that an additional 20,000 consumers would benefit. And the proviso would be that as soon as things improve, the promise would be kept.

And the promise to remove the GCT on electricity was a good idea, because energy costs are already too high and are a problem. Tax-compliant businesses can reclaim the GCT, but that is inadequate because the business person will have to find the money upfront, which will affect the cash flow.

It would also be a blow to Prime Minister Portia Simpson Miller's assertion that she would never make a promise that she could not keep. If this promise will not be kept, there needs to be further and better explanation and a mea culpa to boot.

Visa implementation

Phillips' presentation was more in the mould of a Shiv Chanderpaul. It was a steady presentation with cautious strokes, such as reduction of GCT by one per cent to 16.5 per cent, and expectation of one per cent growth. There were no Brian Lara-type strokes from Phillips, and even the cautious strokes were overshadowed by a bad light tax which needs to be reversed. It could be reversed if corporate tax was reduced from 33 per cent to 30 per cent and not 25 per cent. In addition, I will repeat an idea that I proposed last year (May 5, 2011) about instituting a visa regime for non-Caricom residents who visit Jamaica.

In 2009, Delta Airlines, the largest airline in the world, instituted a US$50 charge on the second luggage for international travellers, not domestic travellers. We need to institute a Jamaican visa that shows that brand Jamaica is attractive to visit. Visitors have disposable income. Smaller countries than Jamaica have a visa regime. Furthermore, during the Cricket World Cup in the West Indies, we introduced a CARICOM visa and it did not have an adverse effect on visitor arrivals.

It is possible to charge a net of US$100 for a 10-year Jamaican visa. And, since 1.2 million visitors arrive in Jamaica annually, it means that Jamaica could earn US$120 million or $10 billion. This can become operational in six months.

This measure could help us to see the light of day.

Devon Dick is pastor of the Boulevard Baptist Church in St Andrew. Send feedback to columns@gleanerjm.com.