ALL FUEL SUBSIDIES WILL BE REMOVED EVENTUALLY
All subsidies on petroleum products will eventually be removed.
In June 2022, The New Dawn Government extended and maintained the prevailing subsidies or tax waivers on Value Added Tax (VAT), Excise Duty and Customs (Import) Duty on petroleum products – which were in line with Statutory Instrument (SI) number 3 of 2022 and coming to an end on 30th June 2022 – for another three months up to 30th September 2022. This means that government is losing millions of dollars in potential tax earnings per month.
However, it has always been the New Dawn Government’s policy and strategic direction to remove fuel subsidies and direct the government spending towards social sectors that impact positively on the well-being of our people such as health, education, social security etc. Instead of the energy sector getting funding from government, it must instead help to raise the needed revenue.
As things stand, government is not earning any money anymore from fuel marketing and sales while those trading in petroleum products are making the money. This means that the poor are missing out on the funds we are subsidising fuel. Therefore, as long as the prices of petroleum products keep going down, we are likely to reach a point whereby we can then remove the tax waivers on petroleum products, which are really subsidies, and ensure the new prices of petroleum products are stable but not too high for end users. At this point, fuel marketing will now contribute to the treasury. Taxes will then go to the treasury.
Meanwhile, Ministry of Energy Permanent Secretary Francesca C. Zyambo (Mrs) has since announced that tax waivers extended to Oil Marketing Companies (OMCs) at the begging of this quarter shall not be extended beyond 30th September 2022.
Further, recently, Ministry of Finance Permanent Secretary Budgets and Economic Affairs, Mukuli Chikuba, said that the reinstatement of VAT and excise duty is meant to make fuel procurement cost reflective. Mr. Chikuba was speaking during a capacity building workshop on the Extended Credit Facility from the International Monetary Fund, where it was further discussed that eliminating implicit subsidies on fuel was part of the IMF and creditors’ reform programme agreed by the government.
Good evening.
Hon. Eng. Peter Chibwe Kapala
Minister of Energy
- 2022