BUSINESSES will suffer as the Government raises the general consumption tax (GCT) on electricity to help fund its $613-billion budget, said two affected associations.
The Jamaica Manufacturers’ Association (JMA) and the Micro, Small and Medium-sized Enterprises (MSME) Alliance both said the new measure will be too much for companies operating in an already difficult business environment.
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GCT-free solar panels are generating huge interest among businesses struggling with electricity costs, said the Jamaica Manufacturers’ Association
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. http://jamaica-gleaner.com/gleaner/20120525/lead/lead7.html 
Simpson Miller
Daraine Luton, Senior Staff Reporter DESPITE DECLARING in its election manifesto that it would “remove the general consumption tax (GCT) on electricity charges to ease the burden caused by electricity bills,” finance minister Dr Peter Phillips is insisting the People’s National Party (PNP) has delivered on its commitment to Jamaicans. Phillips, the country’s finance minister, who served as campaign director for the PNP in the last general election, on Thursday announced in Parliament a 300 kWh threshold on electricity consumption above which GCT would be charged. “A commitment was given in relation to GCT and by raising the threshold, we have in fact relieved all except the highest consumers of electricity,” Phillips said. The PNP, in its manifesto, listed the rollback of GCT on electricity among 18 steps to full people power. Yesterday, Phillips argued that 90 per cent of residential customers of the Jamaica Public Service would not pay GCT on their electricity bills. He said that the move by the Government would provide protection for the working poor and marginalised. Previously, the threshold on electricity consumption was 200 kWh. Phillips also announced that the GCT on electricity would increase from 10 to 16.5 per cent. In the meantime, Phillips argued that the increase in the rate of GCT would not impact businesses. “All businesses can in fact claim their GCT payments back so that for businesses that are registered taxpayers for GCT, they are able to claim back their GCT payments, so on that basis, we have fulfilled a commitment that was given to the country,” Phillips said. PM snaps PNP President Portia Simpson Miller, now prime minister, repeatedly snapped at suggestions that the proposal for a rollback of GCT on electricity was not properly thought through. “Everything we say from our platform they criticise,” she said, while adding that she has come to accept the criticisms of the “uncharitable and the unjust”. “My platform will promise nothing that we are not sure we can deliver,” Simpson Miller said in St Thomas. Yesterday, the minister of finance said “during the election campaign, we would not have a sense of how dire the public finances of the country was at the time”. He added: “We have a simple choice, we could remove it, including at the highest end consumers, or we could try to rescue those same high-end consumers by rescuing Jamaica. 
While all eyes will be turned on Dr Peter Phillips on May 24 on how he composes the Jamaican Budget to achieve, in addition to economic growth and the protection of the vulnerable, meaningful fiscal targets that will not dissatisfy the Washington Consensus and the markets, we must not lose sight of the single most important factor which has plagued the Jamaican economy for close to 40 years: energy. As I have written and spoken about on a number of occasions, cheap oil was a significant factor in the appreciable economic growth we achieved in the 1950s and 1960s, and expensive oil has been a significant factor in our anaemic growth performance for most of the period since then. I don’t know how many people are aware that oil was so cheap that in the 1960s, we examined with Mitsubishi, and separately with Kaiser Aluminum, the building of an aluminium smelter in Jamaica. A smelter of the size contemplated required some 200 megawatts of electricity, about one-third of our current average domestic use. However, the quadrupling of oil prices in late 1973 put paid to this. Skyrocketing prices We have seen stupendous rises in oil prices, since the beginning of the latter half of the last decade with devastating consequences all round, but particularly the alumina sector, which has seen two plants closed for three years (the loss of production from which is equivalent to US$650 million in gross export earnings!) and the other two barely holding on for dear life. The rather adverse effects on the domestic home consumer and the Jamaican economy can be illustrated. The average householder uses about 170 kilowatts of electricity per month. At US$0.40 per kilowatt-hour, this is equivalent to US$68 per month, or US$816 per year. If we calculate the cost on the basis of 500,000 such consumers, this represents a spend of US$408 million annually! Were the price to be lowered to US$0.25 per kilowatt-hour, as is being touted for the new generating unit (Note that as this would represent only 60 per cent of the entire system in the first instance, the average price would be higher), this would translate into increased disposable income to consumers of about US$150 million, which would be a stimulant to the Jamaican economy in the purchase of local goods and services rather than most of it on imported oil. Important objectives In light of the foregoing, we have to strive to achieve four important objectives: 1. Replace oil with coal or natural gas, which are both cheaper now and expected to be so over the long term, for the electricity-generating and alumina sectors; 2. Get the country to conserve on its use of energy, regardless of the fuel; 3. Exploit local renewables and wastes in the production of energy to the maximum extent possible and feasible; 4. Rebalance the ratios between the use of public and private transport as a means of reducing our use of gasolene, which is far more expensive than the fuels used by the electricity and alumina sectors. I consider assisting the prime minister and her relevant portfolio ministers in achieving these objectives as perhaps the most important of my current tasks. Carlton Davis is special adviser in the Office of the Prime Minister. Email feedback to columns@gleanerjm.com http://jamaica-gleaner.com/gleaner/20120416/cleisure/cleisure3.html 
FORMER MINISTER of Finance Audley Shaw said on Wedsnesday that being absent from government has allowed him the opportunity to engage in deeper thinking. Shaw made the comment while making his contribution to a debate on the third supplementary estimates in the House of Representatives. “I am not going to be intimidated at the fact that only a few months ago I was a minister,” Shaw said as he suggested that the |