Gasolene or Mogas price has crossed the Rs 50 mark as a result of the hike in its price since the beginning of July.
Mogas has increased by Rs 9.75 per litre or by 20.14%. whereas diesel retail price showed an increase of Rs12.20 per litre or 34.86%.
The new Reference Price of US$678.96 per metric ton for Mogas is the actual prices for April to June 2021 and the future prices for July to September 2021 at an exchange rate of Rs43.00/US$.
The different contributions and levies account for 41 per cent of the Mogas price and for diesel it is around 31 per cent . Exceptionally we have a levy on another levy !!! A VAT on our contributions, especially on our latest contribution to finance the cost of COVID-19 vaccines. Of the Rs10 of contributions for Mogas , VAT adds another Rs1.50 to the price structure . Is this to pay for the Betamax recission cost ?
Is it justified to have taxes and charges comprising nearly half of the cost of fuel? Government’s arguments are that these taxes help it in meeting prioritised capital expenditures. Is that indeed the case?
For the past four budgets, capital expenditures, excluding the off-budget expenditures, have hovered around a mere 1.7% of GDP annually; thus our tax money is not being used to build a more advanced economy for the future generations, it is being spent on recurrent expenditure. This is irresponsible!
Moreover, the fuel taxes are also a tax on production as transport costs are an important element of the cost of production. Gasoline prices on the average over the past few years around the world show that our fuel prices are much higher than many of our competitive textile producers, namely Indonesia, India, Turkey, Bangladesh, Malaysia, South Africa, Sri Lanka, Philippines, Kenya, Thailand, Morocco, China, and Madagascar. Thus the fuel taxes are harming our industry’s competitiveness.
Yet another argument against fuel taxes is that it is really just like another VAT that adversely affects the middle class and the poor. It increases the regressivity of our already unfair tax system impacting far more heavily on both the middle class and the poor. (The poor spend a larger portion of their income on driving than the rich do). It also has a trickle-down effect on inflation, higher fuel prices mean higher freight, and higher freight makes transportable goods more expensive thus driving up the prices of goods and services throughout the economy. And a good chunk of the gains for the lower middle class and the poor via the populist measures of Minimum Wages and NIT would be snatched away at the gas pump and by inflation.
More importantly, in our specific case, as fuel taxes are an important source of revenue, it is an easy way to fleece consumers.
If Government is not using our money properly and is affecting the country’s competitiveness, it must slash the fuel taxes and other charges. And concurrently, it should reduce wasteful spending and implement crucial reforms to curtail recurrent expenditure and find alternative sources of revenue like improving the progressivity of the tax system, hiking the taxes on Smart Cities and Property Development Schemes and implementing a wealth tax...
Zot baiz nou kas, pas pou develop pays, may pou "bail out" corporates, paye fonctionaires PRB , (kan ban lot pays pé applik politik lostérité) et ditribué à ban petits copains !!!!
Et nou dette fin pas 100% of GDP!!!
An Economically Irresponsible Government!!!
