No need to complain about the excise tax

Oct 31, 2008 Features / Columnists

There has been a lot of talk about the price of oil falling on the world market but the prices of gasoline, diesel and kerosene remain high on the local market.

Some opposition parties claim that the government makes a windfall from the taxes it levies and actually creates hostile conditions for the people who are already hard pressed with other high prices.

When the government planned the budget for last year, the price of oil per barrel was in the vicinity of US$30. This later moved to US$60 and one should easily understand the impact on the budget.

Guyana does not produce oil and since almost everything in the country hinges on oil, there were problems for the government.

In the first instance, the government had to cushion the people so it tried desperately to avoid increases. The people did not have to pay more for electricity although it cost much more to produce one kilowatt of energy.

This, though, did not attract comment from the critics who are now quite vocal about the government creating undue hardships for the people.

The government accrues revenue from exports, taxes and investments. Many of those who are now critical of the government do not even pay their fair share of taxes so they help create the very pressure of which they speak.

But that apart they also do not encourage others to pay taxes so that the roads and other infrastructure could be maintained. Medical services have to be improved and, above all, wages and salaries have to be paid.

Toward the end of last year the price of oil began an upward spiral that sent shockwaves around the world. Guyana with its small and vulnerable economy was not spared.

But the government continued a programme of keeping prices down. Electricity costs remained at the same level as when oil was US$30 per barrel, something that the critics ignored and continue to ignore.

The early part of the year saw oil heading toward US$200 per barrel. At the same time, the money accruing from exports did not increase proportionately.

Government had to find money from some source and these sources were readily visible, especially when the country was also reeling from the price cuts for sugar imposed by the European Union.

However, it opted to sacrifice revenue by slashing its excise taxes on fuel. Oil never reached US$200 per barrel but this was not because the speculators did not try.

In the end oil reached US$147 per barrel but the price of electricity remained constant. Transportation costs went up because the owners of public transport complained that they were being asked to pay more for just about everything, including foodstuff.

But even this increase did not find favour with the government because the welfare of the people remained uppermost in the consciousness of the government.

Today, oil prices have indeed dropped to levels that they were when the government planned the budget last year but the prices of gasoline and diesel and kerosene remain high.

When the price of oil spiraled the government cut its takings from excise taxes so that the people would not pay the real prices.

As the price fell the government reintroduced its excise tax but what the critics fail to understand is that the tax is nowhere near what it was. At one time the excise was 50 per cent on gasoline; today it is 20 per cent and there is a reason for this.

Guyanese have a saying that prices never fall in this country. Even if taxes are slashed the people who sell a product or offer a service simply make a windfall.

They do not pass on the benefits to the passenger in the case of the operators of public transport. Businessmen also enjoy the increased profits.

President Bharrat Jagdeo has explained that he prefers to have the government benefit from the lower oil prices so that it could provide even more services to the people; he does not want the minibus drivers to make the super profits.

At the same time, the prices are being stabilized. The government is already paying the public servants a special package to help cushion the impact of the higher prices. They are the real beneficiaries and this is how it should be.

The fuss about the return of a certain level of excise taxes will in no way harm the people of Guyana. In fact they will be assured of even more resources to help them.

No one can blame the government for positive thinking and barring the politicians and the critics, no one is complaining.

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No need to complain about the excise tax

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