In the last four months, the Government of Belize lost an accumulative $14.75 million in excise-tax revenues in an effort to stabilize regular and diesel fuel, and despite recent uprates, GOB continues to mount up losses, Minister of State in the Ministry of Finance Christopher Coye told The Reporter Thursday.
Coye explained that excise taxes on diesel and regular gasoline are now $1.47 and $3.07 per imperial gallon, respectively. Readers would recall that in June, the government had lowered the excise tax on fuel products to $0.01 and $0.90 so as to keep diesel fuel and regular gasoline prices fixed at $13.41 and $13.50, respectively.
While the current rates are higher relative to where they were in June, they remain below their original levels. “We continue to incur mounting excise tax losses [due to the price stabilization program],” Coye underscored. “Recall that immediately before the Government started the stabilization program, the excise tax on diesel was $3.57 per imperial gallon and $3.95 per imperial gallon for regular gasoline.”
Consequently, the minister added, “We are still continuing to suffer an excise loss of $2.10 and $0.88 per imperial gallon.”
Coye explained that all that has changed is that the “rate of loss has since slowed as the government continues to accumulate revenue losses. In July alone, the government lost about $6.5 million when the excises taxes were “nearing zero for the month.”
The price stabilization program is the government’s policy in which it has virtually fixed the prices for diesel and regular. Under the program, when the international prices and acquisition costs were climbing, the excise duty was cut in an effort to absorb some of the fuel cost pass-through.
At present, global prices—while still volatile—have begun to show signs of declining. For instance, on Thursday, Reuters reported that the “average price of U.S. retail gasoline fell below $4 per gallon…for the first time in months.”
However, the stabilization program also works in the reverse. It was designed to help government minimize its overall revenue shortfall by keeping the prices of the two products fixed in the $13 range even when acquisition costs began to decline. To put this into perspective, if the excise duty on regular gasoline was still at $0.90 (instead of the current $3.07), the price at the pump would be closer to $11.33. For Diesel, the June 2022 excise rate of $0.01 would have had present pump prices closer to $11.95.
However, it is also worth noting where the pump prices would have been if the original excise rates ($3.57 for Diesel and $3.95 for Regular) were maintained and the price stabilization program was abandoned. For Regular gasoline, the price would have been closer to $14.38 per gallon. For Diesel, the price would have been more than $15.00, all things being equal.