THE Private Sector Commission (PSC) is acknowledging Government’s intervention to lower the Excise tax when gas prices are high but the body is saying that local consumers should benefit from lower world market oil prices. 

According to a statement issued by the PSC, over the last year the world market prices for Brent Crude Oil fell from a high of $114 per barrel to a low on November 13, 2014 at $74 per barrel. This they noted was a reduction of 35% between the highs and lows for the last 52 weeks. As such, analysts have projected that the prices will fall further in the days to come and that low oil prices will be the norm in the near future.
PRICES AT PUMP
As a result, the PSC sees the lower world market prices as having a “positive impact” on business but is disappointed at the pace at which the prices are lowered at the pumps in Guyana with much benefit not being garnered by consumers locally as yet.
In this light they said, “We understand from a release from the Ministry of Finance that when the prices were high an intervention was made by the Government to lower the rate of excise taxes and now the prices are low the taxes will be readjusted to where they were to facilitate stable prices.”
However, though they acknowledge this position, the PSC still believes the Finance Minister should give due consideration to other factors when this adjustment is being done, to ensure that some of the savings seen worldwide will be passed on to the consumers in Guyana, especially since gold and rice prices have fallen dramatically and the performance of the economy has dampened in the last year.
Only recently, the main Opposition A Partnership for National Unity (APNU) said it views Cabinet’s approval of the tax increase on gasoline from 20 to 40 per cent and the hike on diesel from 15 to 35 per cent as “unwise and uncalled for.”
The Ministry of Finance through a press statement, however, assured that it continues to apply a concessional tax rate on fuel and the movements of oil prices on the world market will not affect current prices. Oil prices have dropped on the world market, triggering the expectation that gas and diesel prices will also decrease.
However, the normal practice as noted by the media over the last four years is that Government’s policy is to ensure that the consumer does not feel the pressure of any fluctuation in oil prices.
In other words, for example, consumers paying $980 per gallon at the pumps will pay that same price when oil prices go up because Government lowers the excise tax. On the other hand, when oil prices go down, Government increases the excise tax and consumers will continue to pay the same amount.
This way the commodity market, relative to gasoline and diesel, remains constant in the interest of the Guyanese people – a welcomed move in many sections of the private sector given that increases and decreases in oil prices fluctuate invariably every quarter, every year.
CUSHIONED FROM SPIKES
The Ministry of Finance contends that this mechanism is in place to ensure that consumers are cushioned from spikes in the world market price, and has functioned effectively in protecting the Guyanese consumer from exorbitant price fluctuations when the world market price reflects high volatility.
As such, the Ministry is expected to continue to monitor the acquisition cost of refined fuel products and would make the appropriate interventions by adjusting the Excise tax rates in order to minimise any adverse consequence on the economy from fluctuations of oil prices on the world market.