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Energy expert Johnston Chikwanda has disclosed that the government is still subsidizing fuel. This takes various forms and hues, such as taxes foregone or waived. In recent times, a number of taxes were waived off viz 16% Value Added Tax (VAT), 25% customs duty, and excise duty which translates to over 41% when these taxes are added
Energy expert Johnston Chikwanda has disclosed that the government is still subsidizing fuel. This takes various forms and hues, such as taxes foregone or waived. In recent times, a number of taxes were waived off viz 16% Value Added Tax (VAT), 25% customs duty, and excise duty which translates to over 41% when these taxes are added.
Chikwanda said those taxes were suspended by the previous Patriotic Front (PF) government in order to suppress the pump prices up to 31st December 2021, that is before going to the elections. Therefore, on 1st January 2022, the fuel pump prices were supposed to increase by more than 41%. But the new government decided to extend the tax waiver policy to mid this year which ends on 30th June 2022.
Chikwanda is one of Zambia’s leading energy experts in Zambia. He pointed out that a subsidy can be direct or indirect as it is a sum of money granted by the government to help an industry or business keep the price of a commodity or service low. Even a suspension of taxes could be construed as a subsidy. If the tax is not waived, that money could have been used for other development works.
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In the meantime, reports indicate that Oil Marketing Companies (OMCs), as well as bulk oil Importing companies in Zambia, are facing tough times following the instability and continued increases in prices of global crude and refined petroleum products. The industry is facing increases in the need for working capital or cash needed to make new orders on a monthly- on – monthly – basis. They want the country to come out with a new strategy to address the issue and to address the oil price instability squarely.
