EDITOR, The Tribune.

MINISTER of Economic Affairs Michael Halkitis’ comment to Our News about the government not benefiting from fuel inflation has rankled the feathers of many middle to lower class Bahamian households attempting to keep their heads above water.

With a carton of eggs now going for nearly $8 in some grocery stores coupled with the announcement of a possible increase in National Insurance Board contributions, Bahamians are beginning to feel as if the system, be it external or internal, is attempting to starve them into oblivion.

Let me state from the outset that the Progressive Liberal Party (PLP) administration cannot be faulted for Russian President Vladimir Putin’s ill-advised decision to engage Ukraine militarily, which has led to the rising cost of fuel globally.

The Russian Ukrainian War, coupled with COVID, has led to hyperinflation across the board.

In this regard, the PLP cannot be blamed. Furthermore, I think the government has performed admirably, considering the external circumstances it has encountered since coming to office.

And I would add that a few members of the Davis Cabinet has stood out so far, most notably Deputy Prime Minister Chester Cooper. Cooper has given an A-plus performance.

Having said that, I must respectfully disagree with Mr Halkitis regarding the state not benefiting from soaring gasoline prices. With the fluctuating nature of VAT, the government stands to benefit from a financial windfall brought on by skyrocketing fuel prices.

For example, with VAT at 10 percent, it would mean that the state would collect just 30 cents on a gallon of gasoline if it costs $3.

If the price shoots up to $6, the state would then benefit from a 100 percent increase in the VAT rate to 60 cents.

An official of the Bahamas Petroleum Dealers Association (BPDA) stated to the Press that the government now collects $1.72 of $6.16, while retailers collect just 54 cents, despite having to purchase and store the fuel, pay staff members, insurance, maintenance, utilities and other miscellaneous bills.

The suppliers, like Shell and Esso, earns just 33 cents on a gallon. This means that the government pockets $1.18 more than the retailers and $1.39 more than the suppliers.

When VAT was first introduced in 2015, I had argued in The Tribune that it would allow the state to take another bite of the apple, seeing that it was already collecting duty on fuel, which was well over $1 per gallon. Now maybe this initial fuel tax is at a fixed rate. VAT, however, isn’t.

This entire ordeal with Russia, Ukraine and the BPDA is eerily similar to the 1973 Arab-Israeli War which led to the Arab members of the Organisation of Petroleum Exporting Countries imposing an oil embargo on the US, which precipitated an economic recession that swept through The Bahamas.

This oil blackmail was the Arabs retaliating against the Richard Nixon administration for assisting Israel in its war against the Arab coalition and Egypt.

Independence in 1973 would serve as a psychological morphine to deaden the pain of financial stress many Bahamians were feeling.

Just six years into office, there was little the Pindling government could do to mitigate the effects of the oil embargo. The Davis administration, however, is in a position to avert a similar oil ban, albeit domestically, in the event that the 90 percent of BPDA’s members have their way in forcing a strike this Easter weekend. Such a move would bring the economy to a grinding halt at a time when The Bahamas is still recovering from the COVID pandemic. What the Davis administration can do, if only until oil prices stabilise on the global market, is to split its VAT intake by 50 percent with the retailers and suppliers. If the government is now collecting 60 cents of VAT on a gallon of fuel, give 30 cents of that to BPDA members. Under this arrangement, the government wouldn’t have to further burden an already economically depressed public.

KEVIN EVANS

Freeport, Grand Bahama.

April 13, 2022.