Davies
Robert Hart, Staff Reporter
DR. OMAR Davies, minister of finance and Planning, said yesterday that Parliament should consider a proposal that could result in a hike in fuel prices.
He was discussing a recommendation from the Joseph M. Matalon-led Tax Policy Review Committee, suggesting that the Government impose the General Consumption Tax (GCT) on motor fuel.
"There is a logic and a rationale to those recommendations," Dr. Davies told yesterday's sitting of a special parliamentary committee to preview the 2005/06 budget. He said, "the (government's) revenue does not presently benefit from the increased prices for petroleum because there is a cap in the SCT."
SPECIAL CONSUMPTION TAX
Motor fuels now attract a Special Consumption Tax (SCT), which is set at a fixed sum per litter. The GCT, which now averages 15 per cent, would be an additional tax that would vary depending on the cost of producing the fuel.
The Matalon Committee, in its blueprint for reforming the tax system, said that by imposing the GCT, government coffers could see an additional $2.7 billion in much needed revenues. It, however, warned that the move was likely to be 'extremely unpopular.'
Dr. Davies stressed that he has been "pleading over and over" for the country to understand the issues related to the oil bill.
It's unlikely, however, that he could forget the 1999 gas riots which resulted from his budget debate announcement.
GAS RIOTS
The violence that followed brought the country to a standstill, forcing the government to slash the tax hike in half before calm returned.
"If you look at the manner in which oil prices have moved, we run the risk of a deterioration in the balance of payments because there is nothing we can do in tourism or in bauxite/alumina to compensate for that oil bill," Dr. Davies said.
"The (Matalon) Com-mittee has made certain rational, legitimate proposals and those are ones which I certainly would wish for this Parliament to deliberate."
The Matalon Committee found that the tax on fuel in Jamaica is low by international standards. It said that this was a subsidy to the rich as well as to the poor.
"This level of relative under-taxation should not be allowed to persist in Jamaica," the committee stated in its report.
Private Sector Organisation of Jamaica President Peter Moses, who in the wake of the 1999 gas riots was called to chair a committee to examine how the gas tax hike which sparked the riots could be substituted, said the ire of demonstrators was fuelled by the insensitive way in which the tax increase was announced.
