Consumers will not immediately see benefits of cut in gas tax

Energy Minister James Robertson says consumers will not see the full reduction of fuel prices as expected with the impending cut in the taxes.

But Trevor Heaven, the President of the Jamaica Gasoline Retailers Association (JGRA), says the amount of tax passed on will depend on whether marketing companies comply with the tax regulation.

Lower taxes will be charged on fuel starting on Thursday, April 14 as the ad valorem component of fuel taxes falls from 15% to 10%.

The government in announcing the tax reduction on Monday said it was done to ease the burden on consumers.

But exactly what will be done to ensure that the price reduction of about $4.50 is passed on to consumers?

Mr. Heaven suggests that it depends on what the gasoline marketing companies do.

"If a marketing company does not pass on the savings which accrue from the tax reduction, then there’s no way we can pass it on to the consumer, because we respond to their pricing and that is something we have seemingly forgotten," Mr. Heaven said.

Mr. Robertson, in commenting on the matter said there is little the government can do to ensure prices come down, given that companies now operate in a free market.

But he said it will be some time before the full impact of the lower taxes is passed on to consumers.

"(Consumers) will see some positive effect by Thursday. (They) may not see the full effect on Thursday but (consumers) will see it by the following week. It’s a matter of the stock levels, it’s a matter of a number of things," Mr. Robertson said.

Mr. Robertson added that the sale of fuel, which has already attracted the higher tax, will have to be completed before the full impact of the lower taxes is realised to consumers.