Government energy subsidies spread regionally
GOVERNMENTS globally have been finding ways to cushion the impact of higher oil prices caused by the Ukraine war, ranging from fuel subsidies to the suspension of gas taxes.
In Jamaica, the Government has promised to pay 20 per cent of electricity costs for above 400,000 consumers and issue gas vouchers to transport sector operators.
In Barbados, effective midnight March 16, 2022, the VAT payable on gasoline was capped at 47 cents per litre for six months. Additionally, the VAT payable on diesel was capped at 37 cents per litre for six months.
Analysts from KPMG, in their review of the new proposal, commented, “The change related to gasoline and diesel should ease the overall increase experienced by vehicle owners when the gasoline and diesel prices rise from time to time. If the war in Ukraine continues and there are further increases in the cost of imported fuel, the Government may need to consider extending this measure beyond six months.”
Meanwhile, further north, more states are removing gas taxes completely for a limited period.
Maryland and Georgia in the United States this week became the first states in the country to temporarily suspend their gas taxes.
Business analysis source Alpha said the measure in Maryland will be in effect for 30 days, saving drivers US 36.1 cents per gallon on gas, or 36.85 cents per gallon on diesel fuel.
Georgia’s suspension will last through May 31, suspending levies of 29.1 cents per gallon on gas, and 32.6 cents per gallon of diesel.
Alpha reported that other states are considering similar measures, with Connecticut prepared to vote on a gas tax holiday this week.
Alpha stated, “There are also several proposals on Capitol Hill to suspend the federal gas tax, which is 18.4 cents per gallon, though such a move would be unprecedented. There has never been a federal gas tax holiday in the history of the US, while past breaks on state gas taxes have mostly been limited to a few days.”
The analysts noted that in Maryland, the gas tax holiday will save the average consumer around US$15 over the course of the month, but it will end up costing the state over US$100 million in revenue.
Regionally, in Guyana, the call is for subsidies on basic food items. In relation to fuel costs, subsidies are granted by the PPP/C Administration on the full market cost of imported fuel.
However, the People’s National Congress Reform (PNCR) on Tuesday recommended that the Government pour GY$5 billion into subsidising some consumer items, and dole out additional cash to low-income earners and public assistance recipients.
In Jamaica about 460,000 customers of the Jamaica Public Service Company (JPS) will benefit from a 20 per cent contribution to their bills by the Government, over a four-month period.
Meanwhile, $25,000 in vouchers will be given to transport operators to subsidise the now higher-priced fuel.