Gov’t may give up ‘bit’ of taxes for gas margin rise


Tribune Business Editor


The Bahamas Petroleum Retailers Association’s (BPRA) vice-president yesterday revealed the Government may give up “a bit” of its gasoline tax revenues to facilitate a margin increase for dealers.

Vasco Bastian told Tribune Business that he is presently “the happiest I’ve ever been” over the 27-month negotiations with the Davis administration after Michael Halkitis, minister of economic affairs, disclosed on Friday that the Government was “tweaking some proposals” in a hope to resolve the situation “within the next couple of weeks”.

Describing the potential resolution as a “two-for-one deal”, where the interests of motorists, business and gas station entrepreneurs were protected, the Association vice-president explained that it would result in a “small but significant” margin increase that dealers have been clamouring for as critical to their survival.

Mr Bastian, asserting that the industry can now “see some light at the end of the tunnel”, told this newspaper that the proposed resolution is structured so that there is no major increase to prices at the pump while taking gas station operators “back to where we were 13 years ago”. That was when the industry received its last margin increase under then then-Ingraham administration.

Unlike virtually all other industries, which are able to increase prices to cover rising operating expenses, the Bahamian petroleum industry operates on price-controlled fixed margins that require government approval before they can be changed.

Dealers say that, especially following the post-COVID cost of living crisis, ever-rising expenses have effectively wiped out the 54 cent and 34-cent margins per gallon of gasoline and diesel sold, driving them into losses and placing some in a position where they are threatening to close their operations. The Government, though, has been reluctant to raise the margins for fear it will increase fuel bills for motorists.

Mr Bastian, yesterday describing himself as “elated” over the position currently reached with the Government, told Tribune Business he is not fully celebrating just yet until the Association receives official confirmation “in black and white” that all parties are agreed.

“We met with minister Halkitis a couple of weeks ago. We met briefly with Simon Wilson [the Government’s financial secretary] a few weeks ago. They indicated the same thing to us,” he said of Mr Halkitis’ Friday remarks that the Government wanted to have the negotiations “out the way” and resolved shortly.

“We feel as if we will get an improvement, the Government will make an adjustment on their end and they will pass the revenues on to us.... I’m elated. I’m just waiting for the Government to formally put it in black and white. We’ve been at it for 27 years. This is the happiest I’ve ever been in negotiations with the Government.

“It speaks volumes to the Prime Minister’s commitment to small business owners in the petroleum industry. This is what good governments do; they take care of all. He’s making sure that the consumers won’t be impacted significantly, and making sure the revenues he will lose... He loses a bit from his side and gives that to us.”

When asked by Tribune Business whether the Government is mulling whether to give up a small portion of its petroleum tax take to facilitate the dealers’ margin increase demand, in a bid to ensure the impact for consumers and gas pump prices is minimised, Mr Bastian replied: “Exactly, exactly.

“That’s what good governments do. They look out for the masses and Bahamian entrepreneurs. It’s a two-for-one deal, a two-for-one deal. I couldn’t be happier. I will be even happier when once we get it in black and white. We will definitely survive. We will definitely survive.”

When gasoline was priced at $5.48 per gallon, the Association broke it down to show that $1.32 or 24.04 percent - almost one-quarter - of this figure goes to the Government via its ad valorem tax. Dealers and wholesalers, respectively, receive 9.86 percent and 6.21 percent with their 54 cents and 34 cent margins, with VAT adding another 50 cents once the $2.78 landed cost is factored in.

Gasoline and diesel-related taxes are thus among the Government’s strongest and most reliable revenue generators, especially given that there will always be demand for these commodities. Reducing the Public Treasury’s earnings from these income streams would also go against its earlier stance, as Mr Halkitis previously said it would have to make up the lost revenue from other taxes and fees.

Mr Halkitis, on Friday, said that “without promising anything” the Government and petroleum dealers were inching towards resolution. “We’re moving closer. We’re moving closer. We continue to talk,” he said. “Our main thing, and it has not changed, I looked at the newspaper this morning and fuel prices were $5.91, $5.90 and maybe $5.95” from the three petroleum companies.

“Our concern has always been the impact on the driving public and, when we talk about the diesel, we talk about the impact on the bus drivers and the fishermen and that sort of thing,” Mr Halkitis added. However, he acknowledged that the price-controlled fixed margins have placed dealers “in a difficult environment” and the Government remains “sympathetic to their plight”.

“Without sort of promising anything, we’re moving closer,” the minister said. “I understand they’re [the dealers] very anxious, they’ve been very patient and continue to endure a difficult environment. We’re not unsympathetic. We’re looking, and hopefully in the coming weeks we will be able to announce some solution or compromise.

“We don’t want Bahamians automatically to go out to the pump and there’s a higher price. It’s a balancing act. We understand these are Bahamian entrepreneurs who have invested money, taken their life’s savings, gone into debt and are struggling to make it. We’re not unsympathetic to that.

“But, on the other side, is the Bahamian driver. We’re just tweaking some proposals where we can minimise the increase, and want to get that resolved and out of the way within the next couple of weeks.” And Mr Bastian, staying upbeat, said: “We will all be happy at the end of the day. That’s what good governments do.

“At the end of this exercise, the Prime Minister and his team will look like heroes all around. The Prime Minister is doing something that’s not been done in 13 years. The margin increase is small but significant to us. We will thank him officially once we get it in black and white and pay a courtesy call on him.

“This is good stuff. This is truly a new day for gas station operators in this country once we get it in black and white. It’s been 27 months of negotiations and pleading with the Government. It sends a message to small businesses in this country that you must stay the course and remain committed in negotiations with the Government,” Mr Bastian continued.

“I will only celebrate once I get the documents in hand, and then I will really, really celebrate. Just now I’m waiting to get that official letter. It’s any day now. God is good. This will be very significant. It will be a huge boost [to us] as everything has gone up around us - electricity, NIB, Business Licence; all of these things.

“It [the proposed margin increase] brings us back to where we were over 13 years ago. We will see some light again. There is light at the end of the tunnel. Last time we got a margin increase was under Hubert Ingraham. Perry Christie did not give us one, Dr Minnis did not give us one. God is good.”


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