Unrest after JLP hikes SCT On fuel, but is it justified

Emotions have been very high over the decision of the JLP government to increase the SCT on  fuel by a whopping $7.00 . The general view by many leading commentators and analyst as well as the public , is that this increase will be inflationary in nature , thus leading to higher cost all around.

On TVJ news, one taxi association has warned that unless the government removes the new tax, there will be a island-wide shut-down of the taxi service.

Are these comments true and are they justified, will they lead to higher levels of inflation over last year, let’s do the maths.

Last year the PNP government indicated that Jamaica had achieved the lowest level of inflation in over 40 years which was very commendable. What was ironic is that this was achieved despite the fact that the PNP imposed a $7.00 increase in the SCT on fuel. So how were we able to achieve that level of inflation, despite that inflationary increase in fuel prices.

I am not sure why that would have been the case, but this time around, the same amount of increase would lead to significantly levels of inflation, higher bus and tax prices, higher prices for goods and services and a shut-down of the transportation system if its not rolled back?

After completing  a 5 minute analysis of the gas prices between last year and now, I was not very surprised to see that gas prices this year even with the $7.00 increase in SCT is between  9 and 12% LOWER than it was at the same period of time last year, is that not SHOCKING.

So this year all hell is going to break lose given the JLP’s decision to increase the SCT even though the price of fuel, is about 10% lower than it was this time last year.

See table below. Price are Petrojam ex-refinery prices.

Date	SELECTED FUEL PRICES/LITER
	87	90	DIESEL	PROPANE	ULSD
19-Mar-15	$ 103.94	$ 105.59	$   99.79	$    36.76	$ 111.37
Price after SCT	$ 110.94	$ 112.59	$ 106.79	$    43.76	$ 118.37
MAY 12 2016	$   93.58	$   95.23	$   86.20	$    33.85	$ 102.17
Price after SCT	$ 100.58	$ 102.23	$   93.20	$    40.85	$ 109.17
Difference in $	$   10.36	$   10.36	$   13.59	$       2.91	$      9.20
Difference in %	9.3%	9.2%	12.7%	6.6%	7.8%

 

I continue  to find that lack of critical analysis in Jamaica frightening, for  a country that is trying to dig itself out of economic stagnation and there appears to be very few persons who are willing to simply look at the data and form an unemotional non-political attachment to the interpretation of the data.

I have presented the data, now form your own opinion from what I have presented above in the table and the inflation data and then juxtapose this against what you have seen and heard in the print and electronic media.