John Myers Jr., Staff Reporter
DON MULLINGS, president of the Incorporated Masterbuilders Association of Jamaica (IMAJ), is optimistic that the construction sector will remain buoyant despite the recent increase in the general consumption tax (GCT) on building materials.
"Construction will not come to a grinding halt ... I do not believe it will at this time. I believe the construction sector is set for good times ... it is the start of a boom period with the expansion in the various sectors (especially) the mining sector and the whole road network," Mr. Mullings told The Gleaner.
He explained that the increase in the GCT applied to construction material would result in an average two per cent increase in cost.
"Once people (merchants) remain calm and apply the thing (GCT) as presented, it will result in less than a two per cent increase in building material and this will transmit to less than one per cent increase in the cost of construction," Mr. Mullings said.
NO OVERBURDEN
Finance and Planning Minister, Dr. Omar Davies, in his 2005/2006 Budget presentation in Parliament last Thursday, announced that the GCT on building material will be increased to the standard rate of 16.5 per cent effective May 1. Before now, the GCT on certain construction material was lower than that applied to regular goods and services. The increase is expected to yield the Government an additional $384 million in revenues.
President of the Hardware Merchants Association, Michael Brooks, said, "The consumer, though feeling some effects of this movement, should not be overburdened at this time."
However, Mr. Brooks who was speaking on Power 106FM's 'Good Evening Jamaica' programme on Friday, pointed out that "if the trade responds in a panic mode, there would be some significance to that movement (increase in prices) and we are hoping that people will be rational and look at the numbers and understand that it is essentially a marginal shift and not a quantum leap."
Mr. Mullings said while the increase in GCT will have an impact on the industry, the high interest rates and lengthy approvals for titles and building permits were the main factors that drive up costs in the construction industry.
"What the entire industry wants and what we have been asking for is better contract administration by the public sector, speedier approvals (because) if we can speed up the approval process, issuing a title, then believe it or not we should see a significant dip in construction.
In the meantime, he said the IMAJ will be monitoring merchants in the coming months to ensure that prices are not increased excessively.
