Thursday, March 28, 2024

Government Extends Fuel Subsidies For Another Three Months

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The Minister of Energy Peter Kapala has announced that the New Dawn Government will extend and maintain the current subsidies or tax waivers on Value Added Tax (VAT), Excise Duty and Customs (Import) Duty on petroleum products – which are in line with Statutory Instrument (SI) number 3 of 2022 and coming to an end on 30th June 2022 – for another three months up to 30th September 2022.

In a statement released to the media, the Minister said that VAT and Import Duty will remain waived (or zero-rated) on diesel and petrol, while Excise Duty is waived on Diesel and reduced on petrol. There is no tax regime on kerosene, as it were.

Mr Kapala said that though government policy is not to subsidise fuel imports in an attempt to trim Zambia’s perennial fiscal deficit and secure critical support for the economy, the government is also acutely aware of the impact that unfettered fuel price hikes cause, adding that with the war in Ukraine, there has been a worldwide trend where, months after recording unprecedented increases, fuel prices in many countries are again expected to reach new heights this month or the next.

Mr Kapala said that challenging global market conditions have left the Zambian government with no other option but to adjust fuel prices to match international prices, adding that the fuel price increases in Zambia in the last few months have been inevitable to save the country from defaults and that the decisions to increase fuel prices have not been easy ones, as these adjustments can increase inflation and consequently add to people’s miseries.

“However, the resolve by the previous government to borrow unsustainably has deteriorated the economy and the incumbent government is bearing the brunt of these poor machinations. This is because we have to service a lot of the debt left when those funds could have been used for these same needed subsidies and for social sectors that help our people to have a better life.

” Notwithstanding the above, and with oil prices continuing to skyrocket, the New Dawn Government has had to come in and cushion what would be a dire situation had we totally removed the subsidies as originally planned before the Ukraine War started. The current subsidy programme, that has cushioned motorists from the shock of what would be higher prices of petroleum products, will therefore continue for another quarter, the statement read.

“This, nevertheless, means that billions of Kwacha, which could have been raised from the taxes for the treasury, will be lost through these subsidies. This is a lot to other sectors of the economy that needed those funds.

“We will review the situation at the end of the third quarter and see whether fundamentals will be in place to remove the subsidies or not, ” concluded the statement.

10 COMMENTS

  1. These are not subsidies but tax waives so it’s not like the government is taking money from other sources and pumping it into fuel to absorb the increment. Rather its just foregoing taxes and levies which it would have otherwise raised on fuel so as long as world oil prices remain high, these waivers must continue even beyond the 3 months.

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    • According to your own arguments you economists say government cant afford to waive levies and taxes and wouldtherefore incur a budget deficit. So tell us how the new doom govt will avoid this

  2. Kapala states that “the current subsidy programme, that has cushioned motorists from the shock of what would be higher prices of petroleum products, will therefore continue for another quarter, This, nevertheless, means that billions of Kwacha, which could have been raised from the taxes for the treasury, will be lost through these subsidies.” My question to this Energy Minister, Kapala, is what is better? To give tax relief to your own people or to foreign mining companies? Who put you in power? Was it the foreign mining companies or the Zambian people? Are you in power to serve the Zambian people or the foreign mining companies you give tax breaks at the expense of Zambians?

  3. Minister Kapala states that “the current subsidy programme, that has cushioned motorists from the shock of what would be higher prices of petroleum products, will therefore continue for another quarter, This, nevertheless, means that billions of Kwacha, which could have been raised from the taxes for the treasury, will be lost through these subsidies.” My question to Hon Kapala, is what is better? To give tax relief to your own people or to foreign mining companies? Who put you in power? Was it the foreign mining companies or the Zambian people? Are you in power to serve the Zambian people or the foreign mining companies you give tax breaks at the expense of Zambians?

  4. Not sure when this Govt will come out of the stupor and start governing this country without giving excuses about the previous Govt.

  5. This whole IMF deal is a NON-STARTER like this. Well, we can always borrow some money from Edgar China Lungu, he’s certainly got a load of stolen cash in his wheelbarrow, isn’t it Stup!d KZ???

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