Energy Expert Johnston Chikwanda has disclosed that government is still subsidising fuel in form of forgone or waived 16% Value Added Tax (VAT), 25% customs duty and excise duty which translates to over 41% when these taxes are added.
Chikwanda said these taxes were suspended by the previous Patriotic Front (PF) government in order to suppress the pump prices upto 31st December, 2021. Therefore, on 1st January, 2022 the fuel pump prices were supposed to increase by more than 41% but the UPND government decided to extend the tax waiver policy to mid this year which ends on 30th June, 2022.
According to information obtained by the Zambian Business Times-ZBT, Chikwanda who is one of Zambia’s leading energy experts said that “There has been alot of conflicting statements from different stakeholders that there are no fuel subsidies in Zambia at the moment while others are saying there are still fuel subsidies.The correct position is that government is still subsidizing fuel”, he said.
A subsidy can be direct or indirect. A subsidy is simply a sum of money granted by government to help an industry or business keep the price of a commodity or service low, so when a government decides to suspend taxes and duties which they actually need to finance other sectors, they are actually subsidizing that product.
The continuing of the UPND led government to copy and extend the waiver on VAT, Customs and excise duties on petroleum products which was initially done by their predecessor the PF, simply confirms that the subsidy on fuel has continued.
See earlier ZBT article https://zambianbusinesstimes.com/govt-abandons-tax-revenue-from-imported-fuel-extends-waiver/ to appreciate the continued tax waivers and in-fact subsidizing of fuel in Zambia.
