The fuel tax issue that won’t go away
Dar es Salaam. The raging debate over rising fuel prices is now focusing more on taxes, fuel levies and other costs payable to government agencies, with commentators suggesting they should be reconsidered in a bid to provide relief to consumers .
The Energy and Water Utilities Regulatory Authority (Ewura) announced new price caps that pushed prices at the pump to record highs from Wednesday.
While the government has promised to act on factors that are within its control, experts have suggested a simpler and faster way to achieve this goal, including the removal of some levies.
The regulator’s price model indicates, for example, that it costs Sh1,910.01 to deliver a liter of gasoline to the port of Dar es Salaam before it is charged Sh920.65 in government taxes.
The cargo of gasoline is also charged 20 million shillings per vessel as a customs handling fee, 20 million additional shillings per vessel as a fee for the Tanzania Shipping Agencies Corporation (Tasac), 7 million shillings as weights and measures fee and 12.8 million shillings per vessel as costs for the Tanzania office. standards (SCT).
After paying this, retail traders also have to incur freight charges, local authority service charges and other executive agency fees and markups, all on top of the price at the pump.
The experts presented various proposals, including temporary measures and the creation of a price stabilization fund as part of long-term strategies.
ACT Wazalendo leader Zitto Kabwe has called on the government to suspend the charging of Sh500 in levies per liter of petrol, diesel and kerosene for six months, believing that by doing so the government would reduce the burden that citizens currently wear.
According to him, if there are technical problems that can make suspension difficult, the government should consider doing so for diesel which is the most consumed fuel in the country.
By suspending the 500 shilling levy, Mr. Kabwe estimates that the government will lose about 150 billion shillings per month, which equates to 900 billion shillings for the six-month period.
But, in order to offset the money mainly used for rural electrification and water supply, Mr Kabwe said the government had the option of taking out an interest-free loan from the International Monetary Fund (IMF) for this.
“The government, using Tanzania’s eligible foreign exchange reserves with the IMF, is expected to apply for an interest-free loan of between $350 million and $400 million equivalent to an average of 920 billion shillings which will compensate for the loss of revenue due to fuel tax,” Mr. Kabwe said. who qualifies his proposal as pragmatic.
“Then, the government will direct the money to projects that have been funded by taxes and levies obtained from petroleum products to cover all funding for development projects that have been suspended for these six months,” he said. -he adds.
He said that during the period, the government will monitor global oil price trends until things normalize and are stable before recharging levies of Sh500 per litre.
Precipitated by Covid-19 pandemic recovery efforts and later by US and NATO sanctions in response to the Russian invasion of Ukraine, fuel prices in Tanzania soared in arrow, increasing by 1,000 shillings over the past year.
Since then, these two factors have driven up transportation costs and put pressure on the prices of various other goods and services that need to get to market.
On Thursday, Energy Minister January Makamba told parliament the government was aware of the public outcry and was doing all it could to address issues within its powers.