THE Government yesterday caved in to public pressure and announced a reduction in the ad valorem tax on fuel from 15 to 10 per cent. The reduction, which becomes effective this Thursday, will result in the lowering of petrol prices between $4 and $5 per litre at the pumps, according to the Government.
However, the administration failed to impose a cap on the ad valorem tax or remove the 10 per cent General Consumption Tax (GCT) on electricity bills as was requested by the Opposition People's National Party (PNP) which last night reversed an earlier decision to stage street protests against the price of gasoline.
In a statement issued shortly before 9:00 pm, the PNP said it acknowledged the Government's announcement to temporarily reduce the ad valorem tax on petrol and added that it was unfortunate that it required imminent protest action for the Government to finally respond to the plight of the Jamaican consumer.
"The party has decided to stand down the protest action originally planned for tomorrow, Tuesday, April 12," the PNP said. "The party, however, will be continuing its advocacy on behalf of the people for a permanent cap on the gas tax as well as the removal of the General Consumption Tax (GCT) on electricity. To this end, we anticipate, and advise the administration to address these matters meaningfully in the upcoming Budget."
Earlier, in a statement, the Government said this temporary measure will be reviewed quarterly in keeping with 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," the Government said.
Earlier, when the PNP had signalled that it would stage the protest, the Private Sector Organisation of Jamaica (PSOJ) had called on the party to cancel the demonstration.
The business lobby group instead called on the PNP to engage the Government in meaningful and civil dialogue concerning the fuel tax regime and its role within the broader tax regime.
The PSOJ, while sharing the concerns raised about the rising fuel price, said the danger exists that a minority of criminal elements would take advantage of the protest to wreak havoc on the society and disrupt an already
fragile economy.
"Furthermore, and without making any judgement as to the merits of the calls for such revisions, we believe that any changes to the fuel tax regime should only be instituted in the context of a process of comprehensive tax reform, and only after rigorous analysis of policy implications and appropriate consultations among a broad cross section of stakeholders, both within and outside of the transportation sector," the PSOJ said.
President of the Jamaica Chamber of Commerce (JCC) Milton Samuda called for the matter to be taken to the Partnership for Transformation for urgent and immediate resolution within the comprehensive tax reform.
The call for the Government to cap the ad valorem tax yesterday gained momentum among several interest groups.
Danny Roberts, vice-president of the Jamaica Confederation of Trade Unions (JCTU), said that in addition to the cap on the ad valorem component of the gas tax, the Government should remove the existing 10 per cent GCT from electricity bills so as to ease the burden on the already over-taxed working class. Roberts told the Observer that the ad valorem tax should be charged on gas price at the $80 per litre mark, as at over $100 per litre the Government is collecting far more than it has budgeted for.
Meanwhile, the All Island Truckers Association (AITA) called for the removal of the tax specifically on diesel.
"After widespread consultation with its membership, representing Petroleum Haulage Contractors, The Port Haulage Association, Cane Haulage Contractors, and haulage contractors in the mining, cesspool carriage and the distributive trade, AITA was mandated to call on the Government to immediately remove the ad valorem tax on automotive diesel oil," the association said.
Diesel oil, it said, is the fuel generally used by nearly 50,000 commercial vehicles and heavy equipment in Jamaica.
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