The Bruce Golding led
government has made a dramatic shift in political policy in how the cess it
collects on gasoline will be administered.
Almost a year ago, the government came to the country with a controversial decision to impose the $8.75 tax on gasoline to pump billions of dollars into a dedicated fund to fix the country's deteriorating road network.
However, in a startling revelation at the post Cabinet press briefing at Jamaica House on Thursday, Mike Henry, Transport and Works Minister said the gas tax which rakes in more than $1 billion a year, will be used to pay off a multi-billion dollar loan to the Chinese government.
He said some of the proceeds from the $1.8 billion collected yearly from the gas tax will be used to liquidate a J$36 billion loan from the Chinese government at an interest rate of 2%.
Chinese giving JA more than collected from gas cess
Mr. Henry told reporters that the money the government is getting from the China will be paid for by the levy on gasoline.
The explanation that the senior minister and his technocrats offered was that the amount of money coming in from China is 20 times what is collected from the gas tax which up to last month was $1.5 billion.
"All the Chinese funding is related to fuel cess income and it's not additional to the other. That is what is helping to finance the overall loan and that which is going to repay the loan therefore bringing this forward, rather than waiting 30 years.
"This is part of the arrangement for financing the loan," Mr. Henry said.
Repairing more roads in a shorter time
Patrick Wong, Chief Executive Officer of the National Works Agency defended the arrangement saying that it is a prudent way to get more roads fixed in a shorter time span.
"A US$400 million programme would take us in excess of 20 years of fuel cess revenue. What the minister is saying is that we've used (the cess) to borrow US$400 million so that we can tackle the infrastructure in a meaningful way, a shorter five year period ... it's a creative way of financing," he said.
Under the Road Infrastructure development programme, the government will kick start an aggressive exercise that covers traffic management, road repairs and the fixing of the Palisados as of April 1 which will run for the next five years.
The administration says approximately 18,000 Jamaicans are to be employed on the two projects.
Almost a year ago, the government came to the country with a controversial decision to impose the $8.75 tax on gasoline to pump billions of dollars into a dedicated fund to fix the country's deteriorating road network.
However, in a startling revelation at the post Cabinet press briefing at Jamaica House on Thursday, Mike Henry, Transport and Works Minister said the gas tax which rakes in more than $1 billion a year, will be used to pay off a multi-billion dollar loan to the Chinese government.
He said some of the proceeds from the $1.8 billion collected yearly from the gas tax will be used to liquidate a J$36 billion loan from the Chinese government at an interest rate of 2%.
Chinese giving JA more than collected from gas cess
Mr. Henry told reporters that the money the government is getting from the China will be paid for by the levy on gasoline.
The explanation that the senior minister and his technocrats offered was that the amount of money coming in from China is 20 times what is collected from the gas tax which up to last month was $1.5 billion.
"All the Chinese funding is related to fuel cess income and it's not additional to the other. That is what is helping to finance the overall loan and that which is going to repay the loan therefore bringing this forward, rather than waiting 30 years.
"This is part of the arrangement for financing the loan," Mr. Henry said.
Repairing more roads in a shorter time
Patrick Wong, Chief Executive Officer of the National Works Agency defended the arrangement saying that it is a prudent way to get more roads fixed in a shorter time span.
"A US$400 million programme would take us in excess of 20 years of fuel cess revenue. What the minister is saying is that we've used (the cess) to borrow US$400 million so that we can tackle the infrastructure in a meaningful way, a shorter five year period ... it's a creative way of financing," he said.
Under the Road Infrastructure development programme, the government will kick start an aggressive exercise that covers traffic management, road repairs and the fixing of the Palisados as of April 1 which will run for the next five years.
The administration says approximately 18,000 Jamaicans are to be employed on the two projects.
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