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Wed, 22 February 2012

Jamaica Shaves 5% Off Controversial Gas Tax Print E-mail
Written by Owen James   
Tue, 12 April 2011
gas_tax03.jpg The Jamaican government averted possible demonstrations organized by the opposition Peoples National Party (PNP) by shaving five percentage points off a controversial fifteen percent ad valorem tax on fuel.

The PNP subsequently called off planned protests scheduled for today – a move praised by businesses and the general public. However the PNP wants the government to put a cap on the gas tax and to remove the general Consumption Tax on Electricity.
The move will cost the government’s coffers about $3.5 billion Jamaican dollars and
could impact the current medium-term stand-by agreement with the International
Monetary Fund.

The special tax on fuel was part of a package announced two years ago to satisfy cash-
strapped Jamaica’s medium-term economic program submitted to the IMF.

The Jamaican government is heavily dependent on the IMF program as without it cheap
budgetary-support funds which it has been raising from multi-laterals such as the World
Bank and the Inter-American Development Bank would have dried up.

High international fuel prices coupled with the fifteen-percent tax on fuels have hit the
Jamaican consumer very hard. Jamaican motorists currently pay over U.S. $4.40 for a
gallon of high grade gasoline.

The Jamaican government will have to tell its creditors how it proposes to deal with this
critical loss of revenue - something widely expected in the upcoming debate on the
2011-2012 budget.
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