Business Botswana pushes 50% cut in fuel taxes
Mbongeni Mguni | Monday September 26, 2022 06:00
The proposals are contained in a lengthy submission to the Ministry of Finance, which this week kicked off consultations for the 2023–24 budget.
Business Botswana representative, Joseph Willie told a Budget Pitso held on Tuesday that the lobby group wants fuel excise and excise-equivalent customs duty rates for fuel to be halved from April to October 2023.
According to Business Botswana’s calculations, as much as P9.50 could be cut from the current average fuel price should the proposal be accepted by government.
“From a consumer and economic perspective, Business Botswana proposes this initiative which will reduce the cost of living and promote economic activity and growth,” the organisation’s submissions read. “This should provide a six-month economic turbo-charge across all industries and sectors, especially if the reduction in transportation costs trickles down to the ultimate consumers of goods and services. “From a business perspective, this should provide a cash boost as it reduces the cost of transport for all goods and services across the country and we hope businesses and consumers in the supply chain will benefit.”
Retail pump prices have risen eight times since January 2021, with only one reduction occurring earlier this month, as the reopening of the global economy and the war in Ukraine have driven prices higher. The result has been a cost of living crisis, with inflation trending at 14-year highs and government introducing temporary relief measures in August.
Speaking at the Pitso, however, Finance ministry technocrats appeared to pour water on the proposals for reducing fuel taxes.
“There’s no free lunch in the economy and if we are going to cut fuel prices by 50%, it means someone has to pay for that,” Finance ministry permanent secretary, Wilfred Mandlebe said. “We don’t produce fuel and even if we were, there would be a cost to such an action. “Suggest where we should cut to subsidise that 50% and we will consider it. “The truth is that fuel is very critical in the running of the economy and that’s why it’s creating all sorts of problems in terms of inflation but we don’t produce oil and if we have to subsidise the pump price, we have to put aside a budget. “That’s an opportunity cost meaning something has to give and failing that, we would have to increase taxes to subsidise the fuel. “Those are the options.”
The Finance ministry, however, expects retail fuel prices to decrease in the near term, in line with the marginal deceleration in global oil prices seen in recent months. While fears of a global economic slowdown have been the major factor behind softer crude oil prices, Russia’s threats to intensify its campaign against Ukraine caused an uptick in prices this week.