JAMAICA | $99-billion in new taxes coming reveals Golding, Raps Manley-Seaga banknote

JAMAICA | $99-billion in new taxes coming reveals Golding, Raps Manley-Seaga banknote

KINGSTON, Jamaica, March 15, 2022 - The Country is on the brink of a deep crisis; there are dark days ahead for Jamaicans and  the budget offers no solutions, hence the Government needs to  “Cushion the Crisis” and give our people some ease from the heavy burdens.

This is the word from Opposition Leader Mark Golding, as he made his contribution to the Budget Debate in the House of Representatives on Tuesday afternoon. "It is clear that this budget was put together without a strategic response to protect Jamaicans from the economic fallout of the conflict between Russia and Ukraine," he said.

“While the budget is based on a fantasy, the Jamaican people live in reality. They have to face the crisis head on, as they try to feed their families and pay their bills. At this time, reality demands that the Government “Cushions the Crisis” and give our people some ease from the heavy burdens. There is nothing in this budget that will give protection to the people who need it most,” Golding lamented.

"The high inflation that consumers have endured over the past year is only going to get worse. Jamaicans will face higher prices for basic food items, for electricity, for water because of the high electricity content in the production of water, and of course, transportation.

This tidal wave of higher prices will flow through to other items as well. Mothers will struggle to feed their children. More children will face hunger and malnutrition. Even those who are working will not be able to make ends meet," he warned.   

“Last week Tuesday, the Minister beat his chest and colleagues on that side beat their desks as he announced that there will be no new taxes, but the Government plans to collect $99 Billion more in taxes in this coming year, the Opposition Leader said.

“That is an increase of $99 Billion in taxes from the people. Imagine, this is happening in a year when many have not recovered from the Covid recession, and many more are facing hunger and sufferation from the effects of the war in Ukraine!, he noted.

Of the $99 Billion dollars in additional taxes, all he is giving back in this crisis is $2.75 Billion which is a mere 0.1% of GDP. That is one-tenth of one per cent. It is a drop in the bucket. It is not enough to meet the needs of our people… the impact will be minimal,” Golding pointed out.

“The public debt is now below 100% of GDP, and GDP is recovering from the effects of the pandemic. We believe that Jamaica can afford to slow the pace of debt reduction and use those resources to help our people get through these most difficult times. On the other hand, the negative social impact of continued excessive fiscal conservatism will do lasting damage to our society.

“I would support additional expenditures of at least 2% of GDP to address these critical needs facing the society. It is time to focus on helping our people. It is not the time for excessive fiscal conservatism,” Golding declared.

In an effort  to take some of the pressure of rising prices off consumers, the Opposition Leader proposed that the government cap the Special Consumption Tax (SCT) on fuel.

The Fiscal Policy Paper of February 10, 2022 states that the budget is based on a projected average oil price of US$67.50 per barrel. Since that time a war in Eastern Europe has pushed oil prices to well over US$100 per barrel.

"Approximately 40% of the price of gas in Jamaica is made up of various taxes, of which the ad valorem SCT is a major component. We are proposing that for the duration of the inflation crisis, the government caps the ad valorem SCT on fuel at an oil price of $67.50 US per barrel and also the equivalent for the price of LNG, so that prices of those crucial commodities that go above the budgeted price do not result in higher taxes on fuel," he suggested.  

"Consumers need a break on their electricity bills. Motorists need a break at the pumps as the price for gas is at historic highs. Taxi and bus operators need a break. Their costs have eroded the viability oftheir operations. They are now pressuring the Government for a fare increase. Higher transportation costs will affect other prices in the domestic economy.

This is the people’s reality, not fantasy. Capping the ad valorem SCT on fuel at US$67.50 per barrel will take some of the pressure off consumers, motorists and transport operators. To us, it would be a meaningful response to the devastating increases in electricity prices and transport costs due to massive increase in the price of oil.
Since the Government has not budgeted for a windfall in taxes on oil prices above US$67.50, capping the tax at that price will not adversely affect the
budget.

Turning to the new bank notes, Golding said "One thing I love about the Jamaican people is their ability to identify a “poppy show”. Many saw the unveiling of the new bank notes for what it really was.. a distraction from the real issues that affect them."

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