Like most of the things you buy, the concept of supply and demand also affects the price of gas at the pump. But in spite of this situation, the Government does have leverage over the selling price at the pump, because of the excise tax on fuel imports.
Over a three-year period, between 2014 and 2017, the amount of excise tax collected from petroleum products increased by G$9.4 billion, and was set to increase a further G$2.2 billion over 2018. In light of this rapid increase in fuel prices, the Government can achieve its targeted increase of G$2.2 billion and still reduce the excise tax on gasoline. HOW?
The 2018 Budget is calculated on an oil price of US$56 per barrel, but today the oil price is US$65 per barrel. At US$56 per barrel, the Government was set to achieve an increase in excise tax of G$2.2 billion if annual consumption holds. I am advised that at the end of May 2018, consumption held, and thus the projected windfall in additional revenue because of the increase to an average price of US$65 per barrel is computed as G$1.8 billion. Why can’t that G$1.8 billion be passed to the consumers at the pump?
With rising gas prices now rivalling unemployment as a key issue this year, we are still to hear from the President on what his administration is doing for the consumers. Actually, it has been reported in the Guyana press that when the minibus operators approached the Minister of Business for a short conversation, he ordered his driver to drive away. If true, that attitude is not the solution.Rising gas prices adversely affect both the consumers and the economy, and are especially harmful to the lower and moderate-income households. On the assumption that these households do not all own cars and many are using the public transportation system, the situation is made even graver.
Let us take an ordinary family living in Kitty, whose children are at public schools and they use the public hospitals. If the parents of that family need to go to central Georgetown five (5) days a week and the children are walking to school, the proposed increase of G$20 on the fare would increase their transportation cost by 35%.
From where will that be funded, when their annual revenue is fixed? They cannot reduce their rent/mortgage payments. Maybe they can consider eating less meat and fish and more vegetarian meals (without the right non-meat proteins), but that can have an impact on the growth potential of the younger ones. The doctors have told me that protein is necessary to repair your body cells, and is important for growth and development in children and teens.
So, clearly, we will be doing a national disservice to the next generation, by not giving them all the tools to unleash their full potential, if we are to cut corners on their protein to pay for the increased transportation. This is just one example of how these increases in the gas prices are a real threat to the Guyanese nation.
Then what about the ability to save and invest for the future? And there are many more examples. These rising gas prices are a growing threat to the way of life of the Guyanese masses. The solution is very simple: drop the excise taxes by 35% immediately. The planned increases in collection from the excise taxes will be preserved, and all you will you be losing is the unplanned bonus of G$1.8 billion.
But what is very concerning is that, on this occasion, the President seems reluctant to be sharing a message of hope with the people with such progressive policy action on his government’s part. Silence on the part of the Government has now forced the nation into a conflict between the supplier of the service and those demanding the service.
It is not too late to reverse this national disorder and return the nation to civilised order, wherein minibus operators can cover their cost and make a living wage, while commuters can benefit from consistency in their minibus fares, because of a reduction in the excise taxes on petroleum products.
The primitive doctrine that the Government knows best will not work on this occasion, because this gas price issue affects all directly, but more so the poor and the working class.
As the nation approaches local government elections, it would not be sensible for any government to have mass discontent in the society. I am hoping that good sense would prevail soon, because hiding from the issue is not an option, and the end result would be a shellacking for the Government at the local government elections.
