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Thursday, 12 June 2008

Oil prices...the Zambian problem

In the "developed world", the debate around higher oil prices has been whether government should reduce taxes to cushion the impact (the truckers in the UK) or impose higher windfall taxes on oil companies and use the revenue to cushion other energy impacts (Obama's proposal in the USA). In Zambia, higher oil prices means higher subsidies (the tax payer pay even more for car drivers). Thankfully the government now appears to have seen sense. The measure is clearly inefficient and expensive to maintain in this climate.

6 comments:

  1. Why doesnt the goverment just remove all the duties and taxes on oil products? The government has never explained why with an oil refinery, Zambia's petroleum prices are two times higher compared to Malawi, Botswana and Namibia who all import processed oil products from South Africa. Equally the price per gallon is $4 in the USA and $9 in Zambia. All these differences can be accounted for by a poorly designed tax regime by the Zambian govt.

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  2. The government has never explained why with an oil refinery, Zambia's petroleum prices are two times higher compared to Malawi, Botswana and Namibia who all import processed oil products from South Africa.

    may be it's because of the refinery ?

    Equally the price per gallon is $4 in the USA and $9 in Zambia.

    once again, refinery but also transport costs can account for much of the difference.

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  3. Both the USA and South Africa also buy most of their oil from the same international market as Zambia. Botswana, Malawi, and Namibia still have to transport their oil products. Sorry Random African I can not buy your excuses. Zambia's tax regime stinks. It needs to be streamlined. Ever wondered why Zambia is an expensive country to do business in? So many stealth taxes and duties...

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  4. May be the tax regime stinks.. But why don't you prove it by showing that it accounts for all of the difference ?

    I repeat, refineries can be huge bottlenecks, if they're unefficient or if the capacity is not sufficient. And I'd be willing to bet that the refineries in SA or the US are part of the reason why gas prices prices are lower there.

    So are transport costs.

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  5. Random African, here are the taxes and duties on Crude oil and Petroleum products in Zambia:
    Import Duty on Crude 5%
    Exercise Duties on:
    i.Crude 15%
    ii.Petrol 60%
    iii.Diesel 30%
    iv.Heavy Fuels 30%
    v.Kerosene 15%
    vi.and add to all this VAT of 17.5%.
    Random African if these taxes do not seem abnormal to you, then honestly there is no point in taking this further.

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