Subsidy removal

The Government is being less than candid in explaining the removal of subsidies from fuel and fertiliser.

It is folly to suggest that additional revenue generated from the measures will be used to cushion the poor by the development of additional social infrastructure. Bufi.

Successive bumper harvests can be attributed to efforts by peasants who accessed fertilizer to assure their food security as well as produce an excess for sale to Government. Removing the support will affect their productivity and food security.

Similarly removing fuel subsidy has the cascading effect of increasing prices in all goods and d service, a factor that will affect the poor and vulnerable.

The truth is that  Government needs additional revenue to fund unbudgeted expenditure such as the stupid and expensive by election of which we still have nearly 50 to go- if the PF design is to be followed. Add to this the creation of new Districts, sudden recall of non Bemba diplomats and more recently the hefty increase in public service wages and the bill becomes impossible even for Government.

Nobody has told the nation how much the new wage bill will cost, with a minimum of K3million for the lowest paid which is far, far beyond even the most profitable Banks and companies in the country.

Equally nobody has  explained in which part of the budget the 60+ by elections have been budgeted for.

The money to fund this extravaganza must come from somewhere. It is now going to come from the poor and disadvantaged members of society. The easiest route is fuel which collects cash everyday.

It is a very cruel cut that commuters must now pay more for transport in order to avail Government money to fund by elections and pay hefty salaries. Individuals earning the new minimum salary of  K750,000 must now pay more for transport in order to fund a public service workers minimum  salary of K3million. This is neither fair nor just.

We know that this Government will fund by elections at whatever cost to ensure that a tight leash is maintained on the National Assembly the only oversight institution that can provide meaningful oversight over executive excesses.

It is very important that Government knows that we know that the reasons being advanced for the subsidy withdrawals are not only disingenuous but very misleading.

For example to suggest that the subsidy on fuel has been removed in order to channel the resources to the poor and vulnerable who do not own cars is an insult to the intelligence of the Zambian people.

Firstly it is common knowledge that Zambia has the most expensive oil products in the region, mainly because we are buying through the most expensive middlemen.

Secondly; fuel is expensive because of the duties, taxes and long supply chain that is dominated by the state with all the inefficiencies.

Any Oil importing firm considering importation of the product is daunted by the 25 percent excise duty imposed by Government, which duty is not suffered by the Government owned Tazama and Indeni.

If these punitive taxes were imposed independent oil companies would import oil at a cheaper price.

Therefore Zambians must suffer the effects of expensive oil brought  in by Government contract traders, add to this the various taxes, levies and funds, the end result is a price much higher than would apply if oil marketing companies were allowed to bring in the commodity.

The so called subsidy is in reality part of the composite pricing scheme which does not take account of the price distortion introduced by the inefficiency and high taxes that apply as a result of Government involvement in the oil supply scheme.

If these Government factors were removed the price of oil would drop significantly.

If consumers had a choice, they would have preferred to buy from a cheaper source! But they do not.The Government has total control of the oil trade and the benefits it delivers to the Government and to those who have positioned themselves in the oil industry.

Categorized | Editorial

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