Lynford Simpson, Staff Reporter
THE P. J. PATTERSON-LED Government on Friday gave way to unyielding pressure from the influential private sector and Opposition, agreeing to roll back the proposed controversial cess on electricity bills to pay for street lighting.
Mr. Patterson issued a statement yesterday saying that the cess would no longer be pursued. At the same time Maxine Henry Wilson, General Secretary of the governing People's National Party (PNP) said the administration was now looking to accelerate the process of reviewing property tax rates, the proceeds of which will be used to foot the bill for street lights.
She said measures were also being examined to significantly increase the compliance rate for property tax payments which currently stand at a mere 45 per cent. Notices are now being sent to property owners.
Cabinet will discuss the matter tomorrow while Mr. Patterson is expected to give a full Prime Ministerial statement on the latest developments in Parliament on Tuesday.
The decision arrived at Friday, followed several meetings with Government officials, representatives of the Ministry of Finance, tax department and members of the business community The Sunday Gleaner was told.
The about-turn is the result of the pressure that was maintained by lobby groups, despite an attempt at a compromise by Mr. Patterson on Wednesday. At a hastily called press briefing at Jamaica House, the Prime Minister had announced that the 3.14 per cent cess on the electricity bills of Jamaica Public Service Company customers would be credited to the property tax account of property owners 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. However, the maximum credit could not be more than the amount of property tax payable for the year.
This proposal was quickly shot down by the business community and Opposition Jamaica Labour Party (JLP) as "complicated and unworkable" forcing the Government to engage in further dialogue.
"Yesterday, (Friday) I engaged in an extensive re-examination, with the relevant ministers and officials, of all the available options and concluded that the proposal for a cess on electricity bills should no longer be pursued," Mr. Patterson said yesterday.
As such, the amendments to the Electric Lighting Act which would have legitimised the cess, and which were already approved in the House of Representatives will no longer be enacted.
Cabinet will, at its weekly meeting tomorrow, examine ways of securing a substantial improvement in the levels of property tax compliance based on the new valuations which become effective shortly.
Despite backing down, the Government said it remained determined to ensure that payments to the JPSCo for street lighting are put on a secure and reliable footing with continued reliance on the Finance Ministry.
Yesterday the business community welcomed the Prime Minister's announcement.
The Council of Presidents of the Private Sector Organisation of Jamaica (PSOJ) in its response, said the Prime Minister had made a "welcome, sensible and practical decision to withdraw the taxation proposal to apply a cess to electricity bills".
It said the announced plans to pay the cost of street lighting by improved collections of property tax was a positive one. But, it expressed hope that the proposed increase in property tax revenue will come from greater compliance and not just another attempt to collect more from those who now pay.
The Council said it did not understand the Prime Minister's statement that the amounts due to the JPSCo will be paid "without continuing recourse to the Ministry of Finance". Payment for street lights, the PSOJ said, must come from taxation revenue from the Finance Ministry.
It urged the Government to concentrate on becoming more efficient, and said it must manage on the income it earns.
"We congratulate the Government for responding in this way, for making sure they listened," said Anthony Chang, president of the Jamaica Chamber of Commerce. He said the decision was expected based on the level of discussions that had taken place. He urged the Government not to use the opportunity to "impose the tax elsewhere".
For his part, Clarence Clarke, president of the Jamaica Manufacturers Association (JMA) lauded the Government for its about-face. But, he urged the administration to engage in dialogue first next time round.
The JLP took some of the credit. "This (the roll back) is a victory for the Opposition's position with support from the private sector," Edward Seaga, JLP Leader told The Sunday Gleaner.
By imposing the tax, the Government had hoped to raise roughly $540 million per annum to offset the cost of providing street lights.
The PSOJ's response will be carried in full in tomorrow's Gleaner.
