Cut fuel tax

about 2 years in Jamaica Observer

Four weeks after the Government rejected calls for a reduction in fuel tax, Jamaica Public Service (JPS) President and Chief Executive Officer Michel Gantois lobbed the issue back to the State, arguing that a suspension of the tariff would be of great benefit to Jamaicans.Gantois made the forehand volley in a no-holds-barred presentation to the Jamaica Chamber of Commerce Breakfast Conversations at Jamaica Pegasus hotel in New Kingston Thursday morning."Taxes make up 16 per cent of your electricity bill. There is a special consumption tax charged on fuel that we and others use to produce electricity. Customers pay a general consumption tax at a standard rate of 15 per cent and then JPS and the other producers of electricity are taxed at the highest possible corporate income tax rate, more than 23 per cent," Gantois said."All those taxes are... passed through, for they affect the electricity tariff. To a large degree, JPS is a tax collecting agent for the Government. Suspending or reducing taxes during the current crisis would help customers, especially the most vulnerable," he argued.On March 8 Finance Minister Dr Nigel Clarke told the House of Representatives that the Government was aware that oil prices had hit their highest levels in more than a decade, due to Russia's war in Ukraine. However, he rejected proposals to reduce the special consumption tax (SCT) on fuel, which ranges between $37 and $38 per litre.After US President Joe Biden announced a ban on import of Russian oil on March 8, US crude rose 3.6 per cent to settle at US$123.70, while brent crude, the international standard, rose 3.9 per cent to US$127.98 - the highest prices since 2008.Clarke, in his address to the Parliament on that day, said: "The Government recognises that many Jamaicans are suffering from this significant increase in price. As such, we will establish a special provision, in the amount of $2 billion, to provide targeted support to those who are most adversely affected, and who have the least ability to absorb the impact of high gas and energy prices."He noted that several individuals, including members of the Opposition, had advocated a removal of part or all of the additional $7 per litre SCT that was placed on petrol by the People's National Party Administration in March 2015.On Thursday, the JPS president also addressed the nagging issue of electricity theft, which, he said, is robbing the company of US$200 million each year."Electricity theft is the most pervasive and growing problem in the island, committed mostly with impunity and receiving little attention," he said."For the past few years the theft of electricity has accounted for 18 to 20 per cent of all electricity generated, or one-fifth of all the electricity we generate. Think about all the expensive fuel we have burnt to produce electricity that was never paid for. We look at the conflict half a world away as one source of our energy problems, but we have a creeping war in our own backyard," Gantois said.Noting that the problem is not unique to Jamaica, he said other countries have introduced legislation to discourage the practice and recommended that Jamaica does the same."We have invested a lot of money installing smart meters to better locate where theft occurs. Every day we pull down throw-ups, we conduct raids, and we sometimes have the police help us arrest criminals. We are also in the field every single day testing and expanding social and community programmes to convince people to go legit. No amount of goodwill and technology will solve the problem. As long as people cannot afford to wire their house, or pay for electricity, or as long as they do not fear the wrath of a judicial system coming after them, you will not solve the theft of electricity," Gantois argued."We have made a lot of recommendations to the Government, including a ban on incandescent bulbs, providing help with house wiring and certification, affordability assistance, and police training. We have actually offered to train special police teams to detect electricity theft to further deter criminals and to increase our chance of successful prosecutions. We have advocated for special utility poles," he said."Deterrence only works if enough offenders are caught and prosecuted. Given the pervasive occurrence of electricity theft, the court system would be overwhelmed with prosecution. Some countries have resorted to special courts for mass processing of offences to avoid tying up the resources of law enforcement. We have not done that in Jamaica. We suggested harsher penalties for the people stealing. We want the Government to take action that will immediately benefit Jamaicans, from residential customers to businesses," Gantois said."The matter of electricity theft is a matter that should embarrass everybody in this room. It is something we have spoken about for a long time. It distorts business because, if one business is getting electricity for free, it distorts the competition if another business is paying for it. We do not support it, and we will do everything in our power to lobby all agencies of government and private sector to minimise the impact of theft."

Mentioned in this news
Share it on