Minister of Science, Technology, Energy and Mining (STEM), Hon. Phillip Paulwell, says the Government will seek to keep its promise of removing the General Consumption Tax (GCT) on electricity.
“The government is about to propose a budget for the new financial year and revenue measures are to be contemplated and decided on at that time. There is a commitment that was given to the people of Jamaica that we intend to fulfil. That process will emerge at the time of the budget,” Mr. Paulwell said.
Mr. Paulwell was responding to questions posed by Opposition Member of Parliament for St. Catherine, North Eastern, Gregory Mair, in the House of Representatives, Tuesday April 10.
He also informed that for the fiscal year April 2010 to March 2011 the net GCT collection on electricity bills amounted to $1.645 billion.
Of the $1.645 billion collected, $550.3 million came from residential customers, while $1.09 billion was collected from commercial and industrial users.
Mr. Paulwell also stated that currently, there are 492,560 residential customers, of which 377,495 customers are below the threshold of 200 kilowatt hours (kWh).
“If the threshold goes up to 250 kWh, an additional 10 per cent of the total residential customers would benefit. If the threshold goes up to 300 kWh, a total of 16 per cent of customers would benefit. The increase in the threshold to 250 kWh and 300 kWh would have a negative revenue impact, with reductions in revenue in the amount of $113 million and $136 million, respectively,” the Energy Minister said.
He noted further that if GCT is removed from the consumption of electricity, the following categories of customers would be the most likely to benefit: residential customers (who use) over 200 kWh (and) currently face increased cost; and businesses that are not registered (under the GCT threshold or in full exempt business).
“Currently these entities are not able to claim a credit, thus the tax becomes a cost and forms part of the final cost to the consumer. Ultimately the full benefit of the removal of GCT would go to the final consumer, either directly through consumption from Jamaica Public Service or indirectly through the consumption of goods, as the indirect impact may filter through to the consumer via prices,” Mr. Paulwell said.
For his part, Mr. Mair recommended that money collected from the GCT on electricity usage should be placed into a fund supporting renewable energy.
In his response, Mr. Paulwell said that, “there is a very aggressive project being pursued by the Ministry and the World Bank, that is looking at the government and then the private sector, to see how we can transform the usage of electricity to become far more efficient, and it involves a myriad of issues I intend to discuss at our first meeting of the Energy Council.”