JIS News

Story Highlights

  • A total of $4.6 billion is expected to be raised from the increase in Special Consumption Tax (SCT) on petroleum products, to fund the oil hedge programme this fiscal year.
  • It is intended that $5 out of every litre of oil will go towards funding the programme, which seeks to reduce the country’s exposure to the changes in crude oil prices over the medium term.
  • As part of revenue measures for the 2015/16 fiscal year, amendments to the Schedules of the General Consumption Tax Act have been made to allow for this increase.

A total of $4.6 billion is expected to be raised from the increase in Special Consumption Tax (SCT) on petroleum products, to fund the oil hedge programme this fiscal year.

It is intended that $5 out of every litre of oil will go towards funding the programme, which seeks to reduce the country’s exposure to the changes in crude oil prices over the medium term.

As part of revenue measures for the 2015/16 fiscal year, amendments to the Schedules of the General Consumption Tax Act have been made to allow for this increase.

The House of Representatives on Wednesday, September 9, gave its approval to the General Consumption Tax Amendment of Schedules Order Resolution, 2015, which was moved by Minister of National Security, Hon. Peter Bunting, on behalf of Minister of Finance and Planning, Dr. the Hon. Peter Phillips.

Mr. Bunting said this increase became necessary given the adverse effects of the reduction in oil prices on Government revenues.

“Part of the SCT increase on petrol was also attributable to the need to insure against future contingencies,” he said.

Mr. Bunting noted that the measures were implemented in March through provisional orders under the Provisional Collection of Tax Act.

“The present Order is proposed to replace the provisional orders and make permanent the changes to the schedules in the Act,” he said.

The Minister informed that part of the increase in the SCT accrues to the Petroleum Corporation of Jamaica, to replace a controversial one per cent cess that was being levied on petroleum imports by Petrojam.

“This component of the increase in no way affects Petrojam’s reference  billing prices for petroleum products, as it is replacing a cost that was already accounted for in its pricing,” he assured.

Another amendment relates to reintroducing GCT on residential/domestic consumption of electricity above 350 kilowatt-hours.

“This item was recommended to the House on the basis of widening the tax net and reducing distortions in the value-added tax system. In addition, only those households in the higher consumption category would be impacted by the tax,” the Minister said.

The other change corrects a discrepancy in the Act, which was created by the deletion of the printed matter item from the exempt schedule of the GCT Act.

“Printed matter, with the exemption of religious materials, was inserted into the first schedule at a 2 per cent rate; however, religious materials were inadvertently omitted in the transfer, therefore subjecting it to GCT at the standard rate,” the Minister said.

Yet another amendment deals with the $1.50 increase in the rate of SCT on cigarettes. The last rate increase on the product was in 2010.