I WOULD like to now turn your attention to the subject of those recommendations that have caused the most controversy since the report was made public, those in respect of SCT and GCT as they impact on the prices of motor fuels.
The impact of the proposed tax increases on motor fuels were accounted for in the tax burden distribution studies referred to earlier and, as it relates to the increased burden of taxes in the four lowest deciles of the income distribution, is one element of the earlier quoted increase in net tax liabilities of $700 per individual per annum. If we are able to accept the arguments in favour of the shift in the balance of direct and indirect taxes, and we are able also to accept the arguments in favour of direct intervention via a social safety-net mechanism, then it would seem to me that motor fuel prices should be viewed as just one more commodity price amongst a wide range that will be affected by the shift.
The committee has clearly demonstrated that in its approach to the taxation of motor fuels, the Government of Jamaica, at least in relative price terms, has subsidised the increased consumption (to the detriment of our external trade balance) of a non-renewable energy source of which this country has absolutely no indigenous reserves. Further, and although I have not seen the specific data, I would be prepared to stake a rather large wager that these subsidies will be shown in dollar terms to be of far greater benefit to the five highest income deciles than to the lowest five. In other words these subsidies are as much or more subsidies to the rich as they are to the poor.
