EDITORIAL - The gangs fail again on gas-price issue

THIS WEEK'S game of will and brinksmanship between the governing Jamaica Labour Party (JLP) and the opposition People's National Party (PNP) over the price of petrol was another lurid example of how the two gangs that have alternated as Jamaica's government usually place their private concern, the capture and/or retention of political power, over national interest.

So, now the PNP will claim bragging rights for forcing the Golding administration to roll back the price of petrol, seeing the outcome as a notch to be brandished among the faithful in the campaign for the next general election. The JLP's spin, which has already begun, is that it responded to the legitimate concerns of the Jamaican people.

Neither told the truth. Both, knowing that in Jamaica steep jumps in the price of petrol are usually manipulated into being hot-button political issues, chose paths of least resistance to a difficult economic problem.

narrowing the fiscal gap

Heading into the last budget with a huge deficit and under pressure from the International Monetary Fund to narrow the fiscal gap, the government mustered the nerve to hike the tariffs on petroleum. The nominal dollar of the special consumption tax on gasolene was nearly doubled to J$16 per litre. Additionally, an ad valorem tax, at a rate of 16 per cent, was charged on petrol at the pumps.

In the past, such price hikes, manipulated by the Opposition of the day, led to riots. That did not happen in 2009-2010, largely because the PNP, after more than 18 years in government, was still uncertain of itself in the role of Opposition as well as reacting to pressure from the press and civil society for it to behave with restraint.

With the rising price of oil pushing up cost at the pumps, and faced with a government whose many missteps and acts of misbehaviour in office have eroded its moral authority among Jamaicans, the other of the gangs of Gordon House, the country's parliament, was emboldened not only to insist on a rollback, but warn of protests if the JLP administration failed to adhere.

irresponsible

This, of course, was a perverse act of irresponsibility on the part of the Opposition, which showed little regard for the state of the public finances. Even with the higher petroleum tax, Jamaica faced a fiscal deficit of over six per cent of gross domestic product - a measurement of the country's economic performance. That will widen unless the administration imposes taxes on other sectors of the economy, or there is an early and robust growth of the economy, which is unlikely. Moreover, price, historically has had little effect on the elasticity of demand for petroleum, which Jamaica does not produce, but is cheaper at the pumps here than in many developed countries.

But even more irresponsible is the other gang - the JLP administration.

The imposition of the petrol tax, we assumed, was a considered policy position. But at the first sign of stress, the Golding Government retreated to save its political skin, rather than articulate its position to the Jamaican people. It has reduced the ad valorem tax by five percentage points.

We agree with the Private Sector Organisation of Jamaica that this should have been in the "context ... of comprehensive tax reform and only rigorous analysis of the policy implications" of the move.

But when it comes to the gangs of Gordon House, we can't yet expect them to do what is sensible and right.

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