Posts Tagged ‘Tax’

Jamaican Gas tax goes up by $7

Monday, May 16th, 2016

The Jamaican Government has increased the special consumption tax (SCT) on gasoline products by $7. This brings the SCT to $32.11, $32.88, $31.41 & $31.41 on 87, 90, diesel and Ultra-Low Sulphur Diesel respectively. The breakdown of fuel prices are shown below:

Gasoline 87

E10 87 Ex Refinery Price: 59.9692
E10 87 SCT: 32.11
E10 87 Ad Valorem SCT: 9.2075
E10 87 Final Ex Refinery Price: 101.2828

Gasoline 90

E10 Ex Refinery Price: 61.10
E10 90 SCT: 32.4792
E10 90 Ad Valorem SCT: 9.3581
E10 90 Final Ex Refinery Price: 102.9387

Diesel

Diesel Ex Refinery Price: 53.9494
Diesel SCT: 31.4145
Diesel Ad Valorem SCT: 8.5364
Diesel Final Ex Refinery Price: 93.9003

Ultra-low Sulphur Diesel

ULSD Ex-Ref: 61.4377
ULSD SCT: 31.4145
ULSD Ad Valorem SCT: 9.2852
ULSD Final Ex Refinery Price: 102.1374

It should be noted that while the SCT moved by $7 because of how the ex-refinery price is calculated the prices went up by $7.70 between May 12 & 13, 2016. The SCT is added to the initial ex-refinery price and then approximately 10% Ad Valorem SCT is added to arrive at the final price.  See e.g. below

$59.9692+$32.11 = $92.0792
10% (9.9995%) Ad Valorem = $9.2075
$92.0792 + $9.2075 = $101.2867 ( adjusted for rounding errors)
Total: $101.2828

Taxes on Gasoline

It should be noted that taxes on fuel now account for 41% of the ex-refinery price.

Once again it is important that Jamaicans motorists note which gas stations are selling gasoline at the best prices and take advantage of the available savings.

New Gas Tax hits Jamaica

Friday, December 18th, 2009

The new gas tax announced by the government is not straightforward. Hopefully later we will get the details.  As of now,  the announced measure as it relates to the new gas tax is shown below. It must be noted that this is the second adjustment to Gas Tax in the last eight (8) months.

The announcement

Currently under the GCT ACT, fuel attracts both a specific and advaloreum rate of special consumption tax. It is now proposed that an advalorem rate of 15 % be appliecd as follows.

  • Where the fuel is manufactured in Jamaica, the 15% will be applied to the ex-refinery price inclusive of the specific component of the SCT
  • Where the fuels is imported into Jamaica the Advalorem rate will applied to the value (CIF value, plus customs duty, plus stamp duty and the specific component of the SCT), as prescribed in the GCT Act

The items to be affected include:

  • Motor Spirits including e10/87 e10/90
  • Automotive Diesel Oil
  • Kerosene (excluding (turbo Jet A1 Fuel)

Basically you have a formula like this

Ex-refinery price after taxes = (Ex-refinery price before tax + Specific component of SCT) + 15% of (Ex-refinery price before tax + Specific component of SCT)
or
Ex-refinery price after taxes = (Ex-refinery price before tax + Specific component of SCT) * 1.15
What is not absolutely clear therefore is how much is this specific component of SCT.  For a clue, we go back to April 2009.  In April 2009 this was the picture when $8.75 (additional SCT) was added to the ex-refinery price of gas.

April 2009 before Tax Adjustments

Ex-Refinery Before Tax: $44.17
Current Tax: $7.36
Ex-Refinery After Tax: $51.53

April 2009 before Tax Adjustments

Ex-Refinery Before Tax: $44.17
New Tax: $16.11 (7.36 + 8.75)
Ex-Refinery After Tax: $60.28

Now taken the specific component of SCT on E10/90 to be $16.11 the new price could look something like this

January 2010 before Tax Adjustments

Ex-Refinery Before Tax: $44.17
Specific Component of SCT: $16.11 (7.36 + 8.75)   (Fixed)
Ad valorem 15% :  $9.0321 i.e. (44.17+61.11) x 15%  (Variable)
Ex-Refinery After Tax: $69.29

Using the above information as a reference point, the specific component on E10/87. E10/90 and Automotive Diesel are $16.11, $16.48 and $15.42 respectively.

We could be looking at riots come January 2010. The taxi-men will certainly demand and increase.

From a government revenue side, there are some concerns. If the price of OIL collapses to the 40-50 region again, the variable intake will fall.

For the consumer if the price of OIL goes up the variable operation will increase as they will be hit by the increase in OIL price change multiplied by the Variable increase. This in effect could then severely dampen demand and reduce revenues to the government. It also means that for the consumer, the multiplier effect of the increase such as cost of transport of goods and derived product & services,   will be greater that it currently is.

Interestingly of all the measures announced, the revenue projected, JMD $9.4 Billion to is only slightly less than the combination of the increase in GCT ($3.6 billion) and removal of some exemptions ($6.2 billion),  i.e. JMD $9.8 Billion.

What is certain is that it is tough time ahead for Jamaican motorists and their families.

Gas Tax increase in Jamaica Today

Monday, April 27th, 2009

Today is the day when the the gas tax announced by Jamaica’s Minister of Finance takes effect. According to a  Jamaica Gleaner report,  there was a rush on Gas Stations yesterday, however, I did not see any at the stations I passed.  Indeed, I  happened to be at a Gas Station twice in the evening an although there was an increase in activity there were no delays or no real rush.

The jamaican government seems to believe, based on pass experience, that the demand for Gasoline will not change with the price increase, i.e. demand will be inelastic, to borrow a term from economic theory. The months ahead will prove whether their assessment was right or wrong.

In the meanwhile, remember to practice these gas saving tips.

Related:

Jamaica’s Government increases gas tax by $8.75 per litre

Thursday, April 23rd, 2009

It is now official, the Special Consumption Tax(SCT) on Gas products is to be increased by $8.75 per litre. The  Finance and Public Service Minister of Jamaica, Audley Shaw, announced the increase in parliament today.

Many gas stations, in Kingston were swamped with motorist trying to get the ‘last’ of the cheap gas. There was no such rush according to radio reports in the rest of the country.

The data below shows how the situation changes when this tax comes into place on April 2009, using the ex-refinery price of Unleaded 87 for April 23, 2009. 

Current Situation

Ex-Refinery Before Tax: $44.17

Current Tax: $7.36
Ex-Refinery After Tax: $51.53

With Tax increase:

Ex-Refinery Before Tax: $44.17
New Tax: $16.11 (7.36 + 8.75)
Ex-Refinery After Tax: $60.28

As usual gas stations will their respective margins.  

Now that the gas tax increases have been announced, it is hoped that Jamaicans will either accept the decision or if so moved, lodge their protest in a peaceful manner. One simply protest is to boycott the product as far as possible or simply conserve. Time will tell whether or not Jamaica will face similar Gas Riot to those of 1985 and 1999.