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Taxing times

BY BRIAN BONITTO Associate Editor — Auto and Entertainment bonittob@jamaicaobserver.com

Friday, February 22, 2013    

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DERRICK Thompson, Jamaica Gasolene Retailers Association president, is in a quandary. With weeks until the April 1 gas tax kicks in, he said he is yet to be apprised of its application.

"We're trying to get the mechanics of what is going to happen from the finance minister and the Ministry. How will the tax work? Will it just be a regular addition to the price of gas? Or will there be a compound effect?" wondered Thompson.

Last Tuesday, the Government approved a $16.4-billion tax package, a prerequisite to draw down US$750 million from the International Monetary Fund.

The measures include the application of a Custom Administration Fee (CAF) on all imports (except for charitable organisations and the bauxite sector). The projected revenue from the CAF is $1.2 billion and this becomes effective on April 1, 2013.

"We're really concerned that something like this, with the nature and magnitude of it, was discussed at the national level without the stakeholders," Thompson told Auto.

Thompson is not alone in his concern.

The island's major auto industry players are also awaiting word on the tax application.

"We do understand that the Government needs its revenue. But let us work together," Thompson said.

Last June, the Government introduced a raft of measures to rake in $23.4 billion in taxes.

Thompson said any sharp rise in gasolene prices would have far-reaching effects throughout Jamaica's economy.

"In the last four to five weeks, there has been a seven per cent increase in the price of gas at the pumps. And we understand that as long as the American dollar moves and oil prices move, the price of gas will move. The finance minister has no control over that. That's the geopolitics of the business," Thompson said.

He said in another five weeks, gas prices may climb to as high as $160 per litre.

"Some of our members have already been complaining about lowering in sales volume. If this should continue, some will definitely go out of business."

Last Friday, the Transport Ministry said it would be asking Cabinet to consider a proposed fare increase for the state-owned Jamaica Urban Transit Company. Transport Minister Dr Omar Davies declined to state the level of increase sought, indicating it would be inappropriate to do so.

Currently, school children and senior citizens pay a subsidised rate of $20 while adults pay $80.

Dion Chance, president of the St James-based National Council of Taxi Associations (NCOTA), said his 35,000-member organisation was adopting a wait-and-see approach.

Chance said he had met with representatives of the Route Taxi Association in Kingston on Wednesday.

"Even though we need a fare increase right now, we want to watch what is happening and see how the gas tax will affect us," he said.

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