Central gov’t will drop millions on petrol tax

A modest rate cut for Caribbean Utilities Company customers and a $10 million cash transfer to the National Roads Authority will cost the Cayman Islands central government approximately $13 million in revenue during the next budget.

According to tax revenue projections, Cayman’s earnings from the petrol duty charged to diesel and gasoline imports will fall from $35 million in the current budget to $22 million during the 2014/15 fiscal year, which starts July 1.

When added together, the $4 million loss from CUC imports combined with the $10 million on NRA cash transfers totals $14 million. However, the government expects some growth in fuel imports during the year, which will reduce the loss to $13 million.

Finance Minister Marco Archer said the $10 million taken from the tax, which typically goes into government’s general fund budget, will be given to the National Roads Authority specifically for road maintenance and construction.

The other $4 million reduction is for a cut in fuel import duty for diesel that CUC imports. The duty reduction takes effect in January, so it will cost the government only six months of revenue loss, rather than a full year’s loss of some $8.4 million.

The average customer was expected to see a 4.3 percent reduction on monthly power bills from the CUC rate cut, assuming fuel prices stay at roughly current levels, Minister Archer said.

The rate cut will save residential customers with a $300 per month power bill about $12.90 per month, while customers with a $600 per month power bill would save $25.80 monthly.

However, according to changes in customer rates that CUC introduced on June 1, while residential bills will be lower by 1 percent, electric bills will increase by 2.8 percent for general commercial and 1.1 percent for “large commercial” customers.

The changes, which add up to a 1.5 percent increase in the base rate of electricity in Cayman, were approved by the Electricity Regulatory Authority and are unconnected to the cuts announced in the budget.