(Jamaica Gleaner) In what could be considered an almost urgent attempt to get Jamaicans to stick with his governing party, Prime Minister Andrew Holness used the Jamaica Labour Party’s (JLP’s) 81st annual conference yesterday to target middle-income earners and vulnerable groups, promising to reduce electricity tax and provide debt forgiveness on water bills, among other reprieves.
For the next Budget, Holness said his Government would reduce the general consumption tax (GCT) on electricity from 15 per cent to seven per cent and remove the non-tax threshold, replacing this with an incentive-compatible rebate of GCT for persons who use 200 kilowatts or less per month.
He said this would facilitate the rollout of the prepaid system of electricity purchase, which was implemented several years ago but has remained a pilot programme.
The JPS will now be required to roll out prepaid meters nationally, particularly in vulnerable communities, Holness said.
The prime minister did not indicate how many Jamaicans stand to benefit from this decision or the estimated monthly savings for Jamaican households. Still, finance minister Fayval Williams said the cost to the coffers would run approximately $1.5 billion, annually.
“Since approximately 70 per cent of JPS consumers, which includes mostly residential customers, already don’t cross the threshold of usage for the application of GCT then the policy is expected to benefit mostly those from middle- to upper middle-income groups,” economist with the UN Jamaica Economy Panel Keenan Falconer said yesterday.
He said this would also account for the fact that the revenue loss to the Government is minimal and not likely to have a material effect on the fiscal accounts.
He said since most users are at the lower end of the usage threshold, the greater effect of the combined revenue loss could be more attributable to the reduction in the applicable rate than the proposed raising of the taxable threshold.
Falconer said differential rates of GCT are also not uncommon for some goods and services, so the change is not expected to be administratively difficult to implement.
“Overall, the policy proposals appear to be measures of social policy that are designed to alleviate the cost of living by also foregoing some categories of non-tax revenue. The containment of revenue losses through this specific targeting seems to also consider the tight fiscal space within which the government is operating, where overperformance in tax revenue has decelerated, concomitant with growth in the wider economy,” he said.
Water Bill write-off
Holness also announced that the state-run National Water Commission is to write off the debts of Jamaican pensioners with payments outstanding for two years or more.
Persons assessed to be in need based on the PATH beneficiary identification standards should also benefit.
Additionally, persons who have been disconnected for longer than six months who go in and make payment arrangements will get a 50 per cent or more discount on the debt based on a needs assessment.
Holness said they would get up to one year to pay.
This amnesty is to last for three months and will begin on January 2, 2025.
“This is aimed at giving relief to those persons who are suffering with the weight of bills from major household leaks in the past,” Holness said.
Beginning next month to January, Holness said his Government would waive fees for all craft vendors in government-owned craft markets and write off any outstanding fees owed by craft vendors.
“This is designed to ease the economic burden on the craft vendor and give them a head start in the winter tourism season,” he said.
He said in 2025, he would begin the Tourism Worker/New Social Housing Programme, where the Government, through the Tourism Enhancement Fund and hotel owners and operators, would partner to build social-housing solutions for assessed workers in the sector.
Political analyst Damion Gordon said Holness had to use his presentation “of a populist orientation” to speak directly to the Jamaican people given the context of an out-of-favour government and a rising opposition party, based on recent opinion polls.
He said, too, that the People’s National Party’s (PNP’s) strong performance in February’s local government elections and its victory in the Aenon Town and Morant Bay by-elections on Friday would have triggered a response.
He said the prime minister recognises that the emphasis the party has been placing on its macroeconomic stewardship is not resonating and that more tangible and direct interventions that will deliver positive benefits for ordinary Jamaicans are needed.
