THREE analysts and one CEO generally support the new tax package announced by Finance Minister, Dr Peter Phillips on Thursday.

“No one ever really wants an additional tax to your product or service,” chief executive of the Jamaica Public Service (JPS) Kelly Tomblin told the Jamaica Observer, but added, “we understand the need to do it.”

Tomblin’s company is directly affected by the package, as one of the major planks is the re-introduction of GCT at the standard rate on residential customer usage of electricity above 350kwH. Government expects the tax will bring an additional yield of $807 million for the coming the fiscal year.

The tax measure “underscores what we already know”, Tomblin said. “We do see it as a challenge to JPS to step up our conservation and energy efficiently. The tax clearly demonstrates that the Government is serious about its energy and conservation goals.”

But given that mandate to conserve energy, “JPS should be allowed to facilitate it”, Tomblin said. “The measure calls for regulatory reform.”

She said that JPS should be allowed to help customers to become “power smart”, but “with the current regulatory environment we are prohibited from doing that”. The utility company should be allowed to move away from the current flat rate that exists, she said.

“We need a new regulatory environment that allows the utility company to support the national agenda. Our costs are 88 per cent fixed, but our revenue is 23 per cent fixed,” she said.

Financial analyst Colin Steele said the gasoline tax and the electricity tax are the main new taxes. Petrol taxes are to go up by $7.00, with a proposed implementation date of March 18.

“They are very targeted, and given the drop in oil prices should produce the least hardships,” Steele said.

“I am generally positive about what the minister has done,” Steele emphasised.

But Steele was more concerned about some areas that have not been looked at.

“What concerns me are two major issues: arrears to the private sector, including tax refunds and overdue payments, and the cost of the public sector.”

Pensions, especially, were a major concern. “The huge issue remains the unfunded cost of public sector pensions.” He said that $25 billion was due to be paid by Government this year for pensions.

“Almost every public sector worker has a pension paid for by the public, while in the public, less than 10 per cent have pensions,” he said.

On the widely held belief that public sector wages have not increased over the last five years, Steele said: “It’s a myth.”

“We need to stop speaking in riddles and face up to the fact that the public sector wage bill increased from $128 billion for the 2009/10 financial year to $168 billion for 2014,” Steele said.

In addition, most public sector workers get a 2.5 per cent performance increase and potentially other increases each year, he said. They also benefit from special programmes which private sector workers don’t get, including more leave, a lower mortgage rate at the National Housing Trust (NHT) “even though the Government has not contributed to the NHT since 1997”, lower duty on cars, a non-contribution pension scheme and secure employment.

“How is this fair?” he asked. “All of these things need to be addressed for the fairness of government.”

“I have not heard a word about cutting costs — and costs are not just people.”

Chief executive of the Private Sector Organisation of Jamaica (PSOJ) and financial analyst Dennis Chung said: “I think we are heading in the right direction,” although he noted that he had not yet had a chance to look at the numbers in detail to see how the budget will affect the economy.

He said there should be a shift towards targeting the large informal economy, instead of only going after compliant taxpayers “for the last dollar” which, he said, was a waste of resources.

“What we need to do is not just look at the numbers, but to look at the growth strategy,” Chung said.

The agro parks and business process outsourcing (BPO) sector were both important areas, Chung said. But like Steele, he agreed that “public sector transformation will be key. That is at the head of all our problems. We’ve been delaying it for too long, and now is the time.”

The country has to consider that “we are not in competition with ourselves”, and that other countries are advancing. “We are still a very far way behind.”

Economic analyst Keith Collister said the imposition of a tax on gas, coupled with one on electricity are the “clearest signs yet of the absolute determination of Minister Phillips, backed by the prime minister and her Cabinet, to meet all the Government’s commitments.

“The timing is perfect, as it is my belief that oil prices could fall in the next three months due to the US running out of storage capacity,” Collister said.

But he, too, was concerned about the public sector.

Collister noted that the need for a tax package “is almost entirely driven by the planned increase in the public sector wage bill and the crying need to increase the expenditure on health as the budget is otherwise extremely tight.

“It particularly reflects the determination of the Government to achieve the third balanced budget in a row next fiscal year and in the process allowing the repayment of the national debt exchange bondholders next February, thereby avoiding another debt exchange,” he said.

“The debt exchange is something you should never have to do twice, much less three times, if you want to be seen as a serious country good for its word,” Collister said.