Amid a price hike locally for some fuel products, Prime Minister Philip J. Pierre says the government has decided to strike a balance between subsidising fuel and protecting the consumer from very steep increases at the pump.
In an address to the nation Sunday night, Pierre explained that the government has been absorbing increases by lowering the excise tax on fuel, thus shielding the public.
Effective Monday, gasoline and diesel prices increased by $1.00 from $13.95 to $14.95 per gallon.
LPG 100 lb. cylinders increased from $257.95 to $266.43.
However, Pierre, responsible for finance, said the government would continue to subsidise the 20 and 22 lbs. cooking gas cylinders.
“We believe this to be the best compromise at this time,” he explained.
According to the PM, it leaves the government with excise tax revenue of only 27 cents per gallon on gas and 19 cents per gallon on diesel.
He described the revenue as much less than the $4.00 excise tax budgeted by the former government.
“If our government was to adopt the $4.00 per gallon excise taxes as budgeted by the UWP at current prices, the price of gasoline would be $18.68 and diesel $18.76 per gallon,” Pierre declared.
Pierre explained that given the price hikes in the most recent shipments following the Russian invasion of Ukraine, the government would not only collect zero excise tax revenue from fuel, but it will incur a subsidy of $0.73 per gallon on gasoline and $0.81 per gallon on diesel if prices remain the same.
He told his audience that this would amount to a subsidy of $1.1 million monthly compared to targeted positive excise tax revenue of $5.2 million.
And Pierre declared that the subsidy would increase further should international oil prices continue their upward trend in the short term if the Russia-Ukraine escalates and further disrupts the global economy.
Pierre said the government needs revenue to provide essential services and increase police resources to fight the ‘disturbing’ crime wave.
Nevertheless, he asserted that in these unfortunate times inflicted by circumstances beyond our control, the government remains committed to managing its finances prudently while endeavoring to mitigate the anticipated pressures of increases in imported goods.
At the same time, he urged consumers to adjust their consumption as much as possible to minimise the burden of price hikes.