Belize Government Loses $30 Million in Fuel Tax Revenue

Belize Government Loses $30 Million in Fuel Tax Revenue

Thirty million dollars: that’s how much the government lost on fuel taxes in its previous fiscal year. The significant decrease in revenue was a result of GOB’s decision to forgo taxes on diesel and regular gas in 2022. The Briceno Administration had established a fuel contingency fund and implemented several measures to reduce pain at the pumps after fuel had skyrocketed. Minister of State in the Ministry of Finance, Christopher Coye, says that GOB is still covering the acquisition cost of fuel to offset world market prices. 

Christopher Coye, Minister of State, Ministry of Finance: “The cap on fuel is a reflection of a price stabilization mechanism that we introduce. There is not a specific fund out of which we’re taking money and using that money. So there is not any replenishment of that fund because that fund doesn’t exist. What exactly we were doing and are still doing now with prices going up again, is absorbing the acquisition cost, so increasing acquisition costs. So if the price of fuel on acquisition, and I should add as well, government does not buy the fuel. Government is not buying the fuel and then selling the fuel. That would be a complete misconception if that is what people are thinking. Government doesn’t buy the fuel, government doesn’t sell the fuel. Government regulates the price of fuel and it does so through various means. It determines the fuel pump price in the case of regular and diesel, it determines those fuel pump price but that fuel pump price is made up of the acquisition costs that Puma acquires it for. So they are the ones who own the fuel and they are the ones who then wholesale and retail it to the gas stations. So when they buy that fuel it costs a certain price and that goes up and down depending on what are the world prices on the world market. Government has excise taxes that it adds on, that it charges on that fuel, and then you end up with a couple of other factors and then you end up with the final price at the pump.”

Coye further explained that since the government had placed a cap on diesel and regular fuels, they have adjusted fuel taxes. 

Christopher Coye, Minister of State, Ministry of Finance: “When the acquisition cost was going way up, what government decided to do was to reduce its taxes so that in effect the price at the pump stays the same. So government is in fact absorbing that acquisition cost by reducing taxes, which means that government is collecting less revenue, less revenue to provide public services. So that’s not something that can be done indefinitely. And in fact it puts government at a disadvantage in order to provide public services. So since the war in Ukraine began and the acquisition cost went way up, government made that decision to cut its taxes, cut its take of taxes, and the loss on that cut for last fiscal year was in excess of 30 million. So government if it had maintained the same tax as had been in existence for the previous five plus years government would have collected $30 million more over the last fiscal year. Government took that loss. But over the earlier part of this year, the acquisition cost went down and government readjusted the taxes to where it historically was. Now that the price of fuel has gone up again, the acquisition cost of fuel to Puma has gone up again, government has started to look at how it has to start reducing those taxes again so that the price of fuel doesn’t go high or higher. So that’s what’s being actively done. Government hasn’t recovered those losses. Those losses are gone. It would take us a while to be able to recover.”

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