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Tuesday, 7 October 2008

Capturing the fuel tax windfall...

The folly of the new fuel policy has come home. As I noted in previous discussions, the recent fuel tax adjustement will do little to benefit rural users with no access to cars. The beneficiaries are car users and bus operators. Car users benefit directly because the law requires a corresponding reduction at the fuel pump. However, ultimately even they get to pay for this through taxes, though clearly subsidised by non-car drivers! The real losers are likely to be the rural poor. Not only has kerosene been reduced by a very small amount and therefore immaterial, the rural poor will not see the reduction directly because they use buses. To add insult to injury, they will be pay for car drivers through the worsening fiscal position. Correctly understood the measure is redistributive rather than a strong efficient measure :

Operators wont reduce fares (ZNBC News) : The Bus Transport Operators Association has no intention of reducing bus fares for local routes despite a recent reduction in the price of fuel.

Association spokesperson, Ishmail Khanhara, says the operators will maintain the current fares because they have not hiked charges in a long time.

Mr. Khanhara told ZNBC news that a decision not to reduce fares was arrived at during a meeting with officials from the Road Transport and Safety Agency. He said the bus operators instead negotiated for a three hundred Kwacha increment to enable them sustain their operations.
Mr. Khanhara said most transporters are having difficulties in running their vehicles due to minimal profit margins.

6 comments:

  1. From article:
    "Association spokesperson, Ishmail Khanhara, says the operators will maintain the current fares because they have not hiked charges in a long time.......
    ... Mr. Khanhara said most transporters are having difficulties in running their vehicles due to minimal profit margins."

    So what this means is that there are benefits to bus users (and not just car owners) because there will be less reduction of bus service since bus operators will now have less difficulties in running their vehicles.

    ReplyDelete
  2. The anonymous BBC writer is just giving a infomercial for chemically based, genetically manipulated agriculture.

    Using existing groundwater without putting in place the works that restock that groundwater is a recipe for disaster. Agriculture uses much more water than people use for drinking, and using groundwater for agriculture will lead to droughts in the future. Just look at the examples of the Dakotas in the US, or Australia.

    The article could have been titled 'no cliche left behind'. They even start out with 'from basket case to bread basket', as if no one has ever thought of the phrase.

    There are no shortcuts to agricultural development. We need the money from the mines to build infrastructure, including for rainwater catchment like swales and ponds.

    ReplyDelete
  3. Americans eat GMO food, they seem to be thriving.

    Lake Malawi water will be used for irrigation:

    http://news.bbc.co.uk/2/hi/africa/7583871.stm

    And what if the money from mines to build infrastructure is insufficient? Then you need to make alternative plans.

    ReplyDelete
  4. Kafue001,

    "So what this means is that there are benefits to bus users (and not just car owners) because there will be less reduction of bus service since bus operators will now have less difficulties in running their vehicles."

    Certainly the government would spin it that way. But its quite obvious these supposed benefits don't exist. The bus operators have no plans to reduce bus services because there are few close alternatives to buses in rural areas, so demand is basically inelastic atleast for the market as whole.

    I have no statistics to hand, but I know car and buses continue increasing in Zambia as a whole. So this "reduction of services" is just spin. What they are simply saying is "thank you very much" and we will use this new injection to make more profit for ourselves, including investing in more capacity.

    You see, I have no problems with supporting the bus industry or road users...what I have a problem is the PREMISE for the adjustment.

    Also I would like to have seen more thorough analysis from the government on its rationale rather than the 2 pager we got via ERB. Where is the analysis, that allays the IMF fears?

    Incidentally oil prices are falling around off the back of a slowing economy...so in the end the tax would have probably had minimal effect compared to the do nothing.

    ReplyDelete
  5. Mr K,

    What do you think of this GMO plant?

    http://news.bbc.co.uk/2/hi/health/7688310.stm

    ReplyDelete
  6. Kafue001,

    Thanks for the article. The way I look at GMOs, is the way I look at plastics.

    Back in the 1950s, plastics were this all new thing, that was supposed to be the wave of the future - new technologies, etc.

    It was only decades later, that we found out that they were carcinogenic and killed people. It is only now, that in the Pacific Ocean, we are seeing an entire platform of plastic gathering - the result of waste from Japan, China, etc.

    What we really need to do, is go back to the basics - organic acgriculture, with composts and natural fertilizer instead of chemicals; crop rotation, insect repelling plants and predatory insects instead of pesticides.

    solution to food crisis: organic farming
    http://www.youtube.com/watch?v=XVdyqDRgWdE
    (Disregard the patronizing colonial tone, and there is good information in the report.)

    Indoor and Outdoor Organic Gardening Tips : Using Natural Predators in Organic Gardening
    http://www.youtube.com/watch?v=TedYQnTX-J4

    Organic Farming in Western Province - Kenya
    http://www.youtube.com/watch?v=gYPThhiG8bw

    Kenyan youth transform unused land into organic farm
    http://www.youtube.com/watch?v=92jUU1DVgUE

    Permaculture Water Harvesting
    http://www.youtube.com/watch?v=kPrfNVzDNME

    ReplyDelete

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