GCT removal from electricity will not help the poor !

PSM in giving her usual populist speech, indicated that if her party should form the next government, she would remove gct from electricity in a move designed to help the poor and manufacturers

The facts however is the poor see no benefit from this move which is sheer vote catching gimmick.

Facts.

  1. 74% of JPS customer today use less than 200KWH and so pay  no GCT
  2. The rich stands to benefit and not the poor, making this move useless as a means to help the poor.

Lets use simple example with figures for simplicity.

Assumption

  • No tier structure ie ave cost of electricity is fixed regardless of usage.
  • Fixed average cost of electricity of J$40 per kwh( energy + fuel/ipp and FE charges)
  • Ignore customer charges.

Poor

Rich

Ave Cost per Kwh

Monthly Usage

200

500

$40.00

Subtotal

$8,000.00

$20,000.00

GCT

 $               –

$2,100.00

on 300 kwh

Total

$8,000.00

 $   22,600.00

Net benefit

 $               –

$2,100.00

  As  can be the figures above, the government loses $2,100 and the consumer this was designed to assist will get no net benefit.

I would instead suggest the following to help the poor and near poor.

  1. Move the maximum consumption before GCT is applied to 300Kwh ( we could have approx 80-85% now paying no GCT)
  2. Increase the tax free threshold to $650,000     ie  at this rate of below you pay no tax.
As a people we need to carefully analyze statements made on the political platform with a view of really identifying if there any real benefits to be derived from the measures being crafted to “help the poor”.

How about the burden for business ?

The fact are many businesses in Jamaica have found very creative means to beat the tax net to the detriment of the country. Not only do they pay very little taxes, they actually benefit from many waivers thus lowering their payments to the coffers even further.

One would probably suggest that a removal in this tax would enable manufactures to produce at lower cost and as such would be able to pass on these lower cost to the consumers. My experience has taught me otherwise, as in most cases the benefits does not get passed unto the consumer and instead goes straight to the bottom line of the companies and the very consumer it was designed to help gets nothing !

I say put money straight into the pocket of the working glass, not give to to someone to then give to me as that usually does not occur.

Finally how would they close the gap seeing that we are unable to collect enough taxes to pay out bills !

That is my position.


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New York Daily News says Andrew Holness is completely different.

Taken from the New York Daily

Holness is “something completely different” — a positive and realistic business-minded people-person, and that’s quite unusual. He spoke last Thursday at the gathering, of business executives, diplomats and VIPs, presented by the Positive Jamaica Foundation.

Reiterating some of the themes addressed in his inauguration speech last month, Holness called for Jamaica to “take a more assertive approach to managing” its sizable international debt and urged an end to the nation’s divisive “garrison politics” — which keep his Jamaica Labor Party and the opposition People’s National Party at odds and denies citizens access to facilities and institutions in rival areas.

http://www.nydailynews.com/new-york/jamaica-prime-minister-andrew-holness-completely-article-1.979842

Greg Christie & OCG says party’s should debate corruption

Greg is not letting these guys off the hook, see his most recent press release below.

media230

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