FIRST, the Government, through Dr. Omar Davies, the Finance and Planning Minister, promised in true pre-election mode, that there would be no new taxes in the Budget to be presented in April.Then, Nicodemus-like, Prime Minister Patterson announced at a news briefing on February 25 that there would be a cess on electricity bills to fund street lighting throughout the island.
Predictably, the 3.14 per cent cess was seen immediately for what it really was - an inflationary, inequitable tax which would weigh heavily on the already overburdened house-owners and tenants, but even more so on the country's productive sectors, manufacturers and hoteliers in particular.
Obviously the Government never thought the tax through, so when citizens and businesses howled at its punitive effect, the Government sought to adjust its proposal, the Prime Minister even patting himself on the back for his "consultative style".
The adjustment called for the cess paid by property owners to be credited to their property tax account for the fiscal year. This would result in the tax bill for the property for which the cess is paid being reduced by the amount of the cess paid. The maximum credit would, however, not exceed the amount of tax due for that year. Tenants would get a discounted cost of electricity on the first 100 kilowatt hours. Complicated and confusing, to say the least.
So the Government had no recourse but to go back to the drawing board.
The cess, apart from being inflationary, would have imposed undue hardship, especially on businesses. For example, as it is now, the cost of electricity to Jamaican manufacturers is already much higher than it is to their CARICOM counterparts against whom they have to compete, and Jamaican hoteliers, especially after September 11, have been struggling so hard to attract visitors that they have had to be discounting their room rates just to stay in business. To have imposed the cess on them would have been tantamount to increasing their predicament significantly.
With the general election in the air, the logical thing for the Government to do was to scrap the cess which would have been an administrative nightmare to operate. It now should focus instead on a more efficient collection of property and other taxes, levies and duties, cutting its own waste and managing the public purse more frugally, and not permitting it to be an unbridled source of largesse for its favourite contractors.
The Prime Minister announced that after engaging on Friday in extensive re-examination of all the available options, with the relevant ministers and officials, he concluded that the proposal for the cess on electricty bills should no longer be pursued.
Undoubtedly, consultation with representatives of the business sector and the civil society at large is to be preferred to confrontation, but it is efficacious only when it is undertaken before a fait accompli, not after.
