One of the most promising, albeit hardly new, energy saving technologies for cars is diesel. No other internal combustion engine currently available has diesels fuel efficiency. Importantly, today’s diesel engines also deliver this superior fuel economy without the power or performance sacrifice that existed in past decades. Continued improvements in diesel engines, particularly in Germany and Japan, suggest even greater opportunities for energy saving in the near term.

Jamaica may find that it is unable to benefit from these future savings, however. Jamaican diesel fuel has a sulphur content of 5,000 parts per million (PPM), 500 times higher than the ultra low sulphur diesel with a maximum of 10 PPM of sulphur that has been available from 2005 and was widely in use from 2008.

Leaving aside for the moment the environmental issues posed by our relatively dirty fuel, this means that increasingly, new energy saving diesel engines will not be available for Jamaica ensuring that we won’t benefit from developments in the diesel technology field.

In Europe, a leader in the move to “cleaner fuel”, a maximum of 10 PPM of sulphur in diesel fuel is now permitted for most highway vehicles since September 2009. Already, some of their manufacturers are now only prepared to sell vehicles where the sulphur PPM content is lower than 2,000 PPM.

From this month, America’s Environmental Protection Agency requires that all highway diesel fuel should be ultra low sulphur, defined as 15 PPM of sulphur.

The efficiencies of the new technologies embedded in modern engines are in the process of breaking the link between engine size and energy consumption, which has been a major justification of the extraordinarily high duty structure on cars with larger engines in Jamaica.

This suggests that the import duty regime needs to be completely overhauled and restructured with future generations in mind. The goal should be to use taxation to improve fuel efficiencies and reduce exhaust emissions by creating an incentive for fuel efficiency and cleaner burning engines. To do this, we will need to consider how fuel standards can be improved so that Jamaica can take advantage of new technologies and fuel efficiencies.

This makes the car industry a good place to start in looking at tax reform. Even without the changes in duty rates seen in other areas (often driven by short term revenue considerations), a situation where 50 per cent of imports come in with duty concessions creates uncertainty making it difficult to plan and creating huge negative incentives for economic activity. Like other industries in Jamaica, the car industry needs a playing field that supports compliant tax payers as part of the overall objective of improving government revenues. As in other industries, this can only be achieved through a deep level of cooperation and advance consultation, taking advantage of the best industry knowledge as how to encourage economic activity.