Devon Dick

The Honourable Dr. Christopher Tufton, Minister of Agriculture, said recently that "95 per cent of those price increases are directly linked to international events" (Gleaner, November 14). His theory is that the price increases are not the fault of the government and indicated that the blame lies in the price of oil, wheat and corn.

I respectfully beg to differ from the learned minister. The increases are also due to the amount of taxes being levied on gasolene and this is not one per cent within the equation.

There are a couple of things that the government can do that might ease the pressure on consumers. The government will get a windfall of taxes with the increase in the price of oil. It can either reduce the tax rate on gasolene or put a cap on the aggregate money to be collected.

Therefore, the Honourable Clive Mullings would need to change his stance on rejecting calls for a subsidy on the basis that Petrojam is already operating on slim profit margins. There are times when Petrojam will have to be satisfied with breaking even.

The price of petrol has increased for seven weeks consecutively. In addition, the spike is too high. One week, it was $3.50 per litre or $17 per gallon increase. Some consumers do not have even slim profit margins, therefore the government should take a lower rate of taxes in petrol.

Take a cut in profits

If it fails to do that, there is going to be another cycle of high inflation and more pressure on the dollar. Petrojam must take a cut in profits and the government should not increase its tax intake.

This is not a novel idea. In October, I attended the Jamaica Broilers shareholders meeting where we were told that the reason for smaller-than-projected profits, and hence lower dividends to shareholders, was that during the preceding year the price of corn went up but they could not pass on the entire cost to the consumers. The government and Petrojam need to take a leaf out of Jamaica Broilers' book. Another approach that the government can adopt is that of anticipating events. Last year, Jamaica Broilers decided to build an ethanol plant because of what is happening with oil prices and today that investment has paid off.

Price of oil

Eighteen months ago, knowledgeable persons within the oil-trading business predicted that a barrel of oil would cost US$100 by the end of 2006.

Therefore, I wrote a series of articles beseeching the then government to implement the use o energy. The price of oil did not reach $100 in 2006 and has not quite reached it in 2007, but it should not catch anybody unawares.

It is sad that this country with so much sunshine is not making better use of solar energy. It is a paradox that Jamaica, land of wood and water, is not making better use of hydroelectricity.

The government can also use moral suasion on private sector bodies and encourage them not to pass on the full increase with a promise to remove the National Housing Trust tax on businesses.

In that light, the Prime Minister's promise at the Jamaica Labour Party conference of implementing the tax reform and easing the burden on taxpayers is welcomed news. The Matalon report is a good report save and except the call to increase GCT.

So you see, Mr. Minister, there are measures the government can take, such as not increasing the tax intake from petrol, implementing the tax reform and using moral suasion on the private sector bodies that would ease the pressure on consumers.

Rev. Devon Dick is pastor of Boulevard Baptist Church and author of 'Rebellion to Riot: the Church in Nation Building'.