Can't these guys get anything/one thing/something right for a change???
Mid-Year Report “flawed†– Dr Luncheon
October 21, 2015 By GuyanaTimes
…Guyana’s oil prices tied to PetroCaribe, not world market
Former Cabinet Secretary, Dr Roger Luncheon has described as “flawed†the A Partnership for National Unity/Alliance
For Change (APNU/AFC) Administration’s analysis regarding the fluctuation of oil prices on the world market and how the benefits were passed down to the public here.
The recently-released Mid-Year Economic Report said that under the People’s Progressive Party/Civic (PPP/C) Administration, the benefits of the global decline in petroleum products were not being passed on to the consuming public.
It also stated that while overall “Customs and trade tax collections remained stable at $5.9 billion, in the first half of 2015… Excise tax collections totalled $15.2 billion, an increase of $2.9 billion. This resulted from a $3.2 billion increase from petroleum products.â€
The report continued, “Increases in petroleum products were due to increase in excise tax rates applicable on imports of gasoline and diesel oil in 2015 when compared to the rates applicable in 2014. During the period January to June 2014, the excise tax rates applicable on gasoline and diesel oil were 20 per cent and 15 per cent respectively as compared to 50 per cent and 45 per cent, respectively, from January 20 to June 31, 2015.â€
This essentially means that the previous Administration had more than doubled the taxes on gasoline (20 per cent to 50 per cent) and increased by almost 100 per cent the taxes on diesel (25 per cent to 45 per cent).
But in an invited comment, Dr Luncheon rubbished this claim, noting that while the Government’s analysis may seem reasonable, Guyana was not purchasing fuel from the world market and as such, the domestic price for petroleum products has to be taken in the context of the PetroCaribe Agreement, where Guyana and other Caribbean countries were buying fuel from Venezuela at a concessionary rate.
He explained that when world market prices skyrocketed, signatories to the PetroCaribe Agreement were still enjoying relatively low oil prices. As such, he said it would have been unreasonable to ask the Venezuelans to lower their price when world market prices declined, adding that the agreement had a direct impact on the fuel price adjustments locally.
The APNU/AFC Administration has been continuing with the policy of excise tax adjustment although since the change in Government, the economy has flattened out and badly needs stimuli from all quarters to get it moving upwards.
Dr Luncheon said the new Government was now in a better position to lower the excise tax rate on fuel, since the PetroCaribe Agreement with Venezuela has collapsed and Guyana would now be procuring its fuel at the current low world market prices.
Cheaper fuel will significantly bolster productivity in the manufacturing sector; reduce the input cost in the agriculture sector, including for rice and other crops, and help to jump-start the ailing local economy by allowing for a greater circulation of cash.
Many businesses bypass the Guyana Power and Light (GPL) and generate their own electricity, and lower fuel prices would have a direct buoyant effect. GPL bought most of its fuel from Suriname at the world market cheap prices, and it also was allowed to make huge profits, since its rates were approved by the Public Utilities Commission two years ago when fuel was more than two-and a half times costlier.
All of these pressures have helped to dampen business activity in comparison to competing economies even in the Region.
To add salt to the fuel ‘wound’, the Mid-Year Report also revealed that Guyoil, which was formed specifically to induce competition in the consumer petroleum market by selling gasoline at the cheapest possible prices, also refused to pass on savings at the gas pump and raked in record amounts.