20 March 2008
opinion
Maputo — Mozambique's main opposition party, the former rebel movement Renamo, on Thursday demanded that the government slash taxes on fuel.
Speaking in the country's parliament, the Assembly of the Republic, Renamo deputy Ismael Mussa claimed that by slashing the tax burden the government could easily reduce the price of a litre of diesel from the current 35.35 meticais (1.46 US dollars) to just 25 meticais.
Mussa and his fellow Renamo deputy, Antonio Muxanga, waved aloft a document on fuel prices from the Ministry of Energy, which they seemed to believe was top secret, and which revealed that Value Added Tax (VAT) was charged four times on imported fuel.
Energy Minister Salvador Namburete told reporters that, in reality, the document, showing the calculations made to arrive at the current fuel price, was entirely public, but Renamo had failed to read it properly. VAT is not a cumulative tax: VAT charged at the earlier stages of the value chain is deducted at the later stages, so that the only VAT which enters the final fuel price is that paid by the retailer.
The total import cost of a litre of diesel is 19.74 meticais - or 55 per cent of the final price. The profit margins for the distributors and retailers are 5.87 meticais (16.6 per cent of the final price). A transport differential adds a further 0.31 meticais (0.9 percent), and the taxes amount to 9.43 meticais. This is only 26.7 per cent of the final price, which is a far cry from the 50 per cent or so that Renamo had implied.
The taxes can be broken down into the Special Fuel Tax (4.02 meticais), customs duties (0.86 meticais), and VAT (4.55 meticais). The Special Fuel Tax is much higher on petrol, at 7.26 meticais a litre. But the government has exempted kerosene, often regarded as the fuel of the poor, from both the Special Fuel Tax and VAT.
This polemic broke out during a debate on the cost of living, arising from a demand from the Renamo parliamentary group for information from the government as to the measures being taken to reduce the cost of living.
Prime Minister Luisa Diogo pointed out that much of the revenue raised by the Special Fuel Tax is earmarked . 70 per cent of it goes to the road fund, used for such matters as road maintenance and road building. Five per cent is turned over to the municipalities for their roads. A further five per cent is used to subsidise interest rates paid by private transport operators when they borrow money to purchase vehicles. And another five per cent is used to subsidise the building of filling stations in rural areas.
It seemed that Renamo was opposed to all of this, said Diogo. "If they were in government they would stop building roads and bridges", she said, "they would stop channeling funds to the municipalities, they would stop the funds for building rural filling stations. And this is why they are not in government".
Namburete pointed out that, for key economic areas, the government has already slashed fuel taxes by 50 per cent. That tax cut applies to diesel used in agriculture, fishing, mining and electricity generation.
Outright lies were told by some Renamo deputies. One claimed that when the prices of crude oil rose on the international market, the government raised the prices of fuel in Mozambique at once. This was "not true, and not possible" retorted Namburete.
For there is a delay between the rise of oil prices and the refining of that oil into the liquid fuels that Mozambique purchases. It can take a couple of months before a rise in crude oil prices is reflected at Mozambican petrol pumps.
This deputy claimed that kerosene prices in the northern district of Mossuril had risen from 22 to 28 meticais a litre overnight. This was quite impossible, said Namburete, since there are no filling stations at all in Mossuril. And if the deputy was talking about cans of kerosene sold by informal traders - those prices were not controlled, and on the informal market a litre of kerosene in Mossuril currently cost 31 meticais.
Asked by skeptical Renamo deputies about the use of buses run on Mozambican natural gas rather than imported diesel, Namburete admitted that so far there were only four of them, operated by the publicly owned Maputo bus company, TPM. But it was intended to convert more TPM buses to run on gas, and the experiment would be extended to other areas, once the specialised filling stations required are installed.
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