Wednesday, March 13, 2013

Biti faces fuel price hike backlash

Biti faces fuel price hike backlash
12/03/2013 00:00:00
by Staff Reporter

THE government's move to raise excise duty on fuel has outraged ordinary Zimbabweans with analysts warning that the decision would adversely impact business and, likely, undermine prospects for sustained economic recovery.

Finance Minister Tendai Biti this week confirmed excise duty on fuel would go up by between 20% and 25% as the cash-strapped coalition administration battles to raise cash to fund key activities, including elections later this year.

“One of the measures that we are going to implement with immediate effect is that we are going to raise excise duty on diesel and petrol,” Biti said while presenting his monthly economic review.

“We are going to raise excise duty of diesel to $0,25 from $0,20 and $0,30 from $0,25 for petrol. It has been unavoidable that government seeks recourse from the ordinary tax payer, hence, excise duty on diesel and petrol is being reviewed upwards.”

And faced with prospect of consequent increasse in the prices of basic goods and services, ordinary Zimbabweans slammed Biti’s decision saying it would worsen the plight of the struggling poor.

“Poor people will not be able to fuel for their vehicles. How are the people going to afford. Ninety percent of the people are not working,” a pensioner told Newsday.

A commuter omnibus operator added: “The commuters will also not be able to pay the $1 that we will be demanding for a single trip. This means our families in the end will suffer.”

Economic commentator told state radio: “(The increase) will translate to more burdens on the general public as transport costs will also go up and the industries will be greatly affected as production costs will be unsustainable.”

Businessman Supa Mandiwanzira added: “This move is dangerous as it will affect the consumer, considering that most of the products and services will also increase and it will have huge bearing on the country’s inflation figures.”

However, Biti insisted that the country would still meet its inflation targets adding local fuel price would remain among the cheapest in the region despite the duty review.
“Zimbabwean fuel is by far the (cheapest) in the region,” he said.

“South Africa increased its fuel last week by 80 cents so the cost of fuel in South Africa is almost one and half to Zimbabwe, so there will be no inflation effect at all.

“We are actually the lowest in the region that is why you see tankers from Zambia coming into purchase fuel (here) so there is no inflation effect at all.”

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