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Minister of Finance and the Public Service, Audley Shaw, has said that taxi fares, electricity bills, cooking gas and fuel used by the bauxite and aviation sectors should not be affected by the increase in the Special Consumption Tax on petrol he announced on Thursday.
“We do not anticipate and expect that they will seek to increase taxi fares,” Mr. Shaw said of the taxi operators.
He pointed out that when the operators received the last increase, in 2008, it was based on a petrol price of US$140 per barrel, as against the current price of US$45 per barrel.
He added that during the period of the reduction of fuel prices, the industry did not pass on any of the savings to the travelling public, and were now being called on to absorb the increase resulting from the tax.
“It is fair, it is a reasonable position, nobody asked them to give back anything as a result of the drastic decrease in the prices of fuel, and so it is only fair and reasonable that we should ask them to hold strain,” the minister said.
“The tax on fuel does affect electricity, it does not affect the bauxite industry, it does not affect the aviation industry and it does not affect liquid petroleum gas(LPG) industry, I want to make that point,” Mr. Shaw said.
The fuel tax will have only a nominal impact on the inflation rate, somewhere in the region of a one percentage point, he said.
Mr. Shaw was speaking at a Post Budget Briefing today (April 24), at his Ministry, Heroes Circle Offices, Kingston, which followed his opening Budget Debate presentation in the House of Representatives on Thursday(April 23).
On Thursday, he had announced an increase in the Special Consumption Tax on fuel of $8.75 per litre and, among other things: doubling the current income tax threshold; increasing the threshold for pensioners; reductions in Transfer Tax and Stamp Duty; broadening of the General Consumption Tax(GCT) tax base and a reduction in the number of exempted items; and a consolidation of statutory deductions.
He said that the reduction in the Transfer Tax and Stamp Duty was done to stimulate the real estate market.
“It is a significant move and it is a deliberate policy of the government, it’s more in line with international standards in terms of transactional cost, but most importantly it is meant to be part of a stimulus package for encouraging more aggressive investment in the real estate industry,” Mr. Shaw said.
He also appealed to vendors and purchasers to stop the “undervaluation” of properties.
“Stop it. You don’t need to under value your property anymore. I don’t want split contracts; we don’t want a contract that is split in two to avoid taxation,” Mr. Shaw said.
He also asked persons to stop abusing the General Consumption Tax (GCT) law. He said that there were too many companies collecting GCT and using it for operational expenses, instead of passing it on to the Government.
“I am sending a message to businesses that are collecting money from the public to be remitted to the Government: Stop using it as working capital. It is not provided for working capital, it is for the running of the country, and I intend to begin to exercise the powers under the General Consumption Tax Act against those offending companies,” he warned.

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