GOVERNMENT says that it will maintain the current subsidies on Value Added Tax (VAT), Excise Duty and Customs (Import) Duty on petroleum products for another three months.
Minister of Energy Peter Kapala says that this is in line with Statutory Instrument (SI) number 3 of 2022 as the current pricing comes to an end on June 30th.
Mr Kapala said VAT and Import Duty will remain waived (or zero-rated) on diesel and petrol, while Excise Duty is waived on Diesel and reduced on petrol.
He said that there is no tax regime on kerosene, as it were.
“Though government policy is not to subsidise fuel imports in an attempt to trim Zambia’s perennial fiscal deficit and secure critical support for the economy, the government is also acutely aware of the impact that unfettered fuel price hikes cause,” he said.
He said the challenging global market conditions had left government with no other option but to adjust fuel prices to match international prices.
“The fuel price increases in Zambia in the last few months have been inevitable to save the country from defaults. The decisions to increase fuel prices have not been easy ones, as these adjustments can increase inflation and consequently add to people’s miseries.However, the resolve by the previous government to borrow unsustainably has deteriorated the economy and the incumbent government is bearing the brunt of these poor machinations,” he said.
Mr Kapala said the current subsidy programme, that has cushioned motorists from the shock of what would be higher prices of petroleum products, will therefore continue for another quarter.
“This, nevertheless, means that billions of Kwacha, which could have been raised from the taxes for the treasury, will be lost through these subsidies. This is a lot to other sectors of the economy that needed those funds.We will review the situation at the end of the third quarter and see whether fundamentals will be in place to remove the subsidies or not,” he said.
(Mwebantu)
Leave a Reply