$2b gas break
Poor, cabbies, busmen may benefit but no rollback of fuel tax
Published:Wednesday | March 9, 2022 | 12:15 AMKimone Francis/Senior Staff Reporter
Minister of Finance Dr Nigel Clarke has indicated that there will be no rollback of the special consumption tax on fuel, even as Russia’s invasion of Ukraine has sent global oil prices to decade-high records.
Clarke, who opened the Budget Debate in Parliament on Tuesday, has instead announced a $2-billion provisional package to support Jamaicans most adversely affected and are least able to absorb the impact of high petrol and energy prices.
“We will come back on the details in terms of allocation because we want to discuss with stakeholders [and] get other people’s views on how we should allocate it,” Clarke said in the Lower House.
“But I can easily see some of it being used to provide some relief to taxi operators who have fixed fares and some being used for children on PATH (Programme of Advancement Through Health and Education) who have transportation cost and so forth,” he added, referencing state welfare.
Last week, state-owned oil refinery Petrojam hiked gasolene and diesel prices, reporting that the costs were mainly impacted by the war in Ukraine and the resultant sanctions imposed by the United States and its allies. But prices at the pump have been on a steady rise long before the February 24 invasion, with double-digit percentage increases dating back to December.
The parliamentary Opposition has been among several groups advocating for the partial or complete removal of the SCT of $7 per litre imposed on fuel by the Portia Simpson Miller administration in 2015, but Clarke said the Government has opted to maintain the tariff and instead continue with indirect taxation.
“So rather than give back in the way that they want and rich people with SUV and Land Cruiser and Prado a benefit from it, and people who have six cars and 10 cars who use the bulk of the fuel anyway, we are doing it in a targeted way. The poor and the vulnerable can be targeted and we will come to their assistance at this time,” said Clarke.
In the same breath, the finance minister said the country must rid itself of oil dependency, noting that a large source of the oil import bill is for petroleum used by cars.
As a result, Clarke said the Government will incentivise the purchase of electric vehicles by reducing the import duty on those automobiles from 30 per cent to 10 per cent for an initial five-year period.
He said the Government will also be exempting the annual registration fees on battery electric vehicles.
Meanwhile, he said some $76 billion, including $40 billion of direct social and economic support, has been expended on the coronavirus pandemic.
He said despite the devastating impact of COVID-19, the economy is recovering.
“We have achieved and projected quarterly economic growth of between 5.8 per cent and 14 per cent, which is the highest economic growth achieved in over 50 years, albeit after a record contraction,” Clarke said, adding that jobs have increased by more than 100,000, resulting in the lowest unemployment rate, 7.1 per cent, in Jamaica’s recorded history.
He told Parliament that the Government is investing $13 billion in loans and credit support for micro, small, and medium enterprises.
Additionally, he said more than $10 billion is being invested in private equity and venture capital to assist small and medium-sized enterprises, early-stage companies, and entrepreneurs.
“We are attracting large investors under our integrated resorts initiative who will invest at least US$1 billion into our tourism product. We plan to come to market with over $200 billion of infrastructure projects of the next three years,” he said.
“We are advancing on unemployment insurance for Jamaicans [and] for the seventh consecutive year, we are not imposing any new net taxes on the people of Jamaica because we believe you are best positioned to decide how to spend your money.”
He said the Government is in the process of rolling out $200 million in food support through Food For The Poor, Red Cross, United Way, and other charitable organisations.
The finance minister added that the Government would implement a “comprehensive public-sector compensation reform ”to make the public compensation system easier, fairer, transparent, easily understood, sustainable, and affordable.
He said the system will better recognise and reward performance while no public-sector employee’s net pay will be lower.
“In fact, every public-sector employee’s net pay will be higher as a result of the new compensation system,” he said.