22 May 2016, Harare – Zimbabwe’s punitive tax regime has given room for a fuel black-market, with illegal dealers smuggling the commodity into the country while Treasury misses out on potential revenue.
Global oil prices have gone down since 2015, prompting countries to reduce fuel prices by as much as 50% with neigbouring states like Zambia and South Africa selling blended petrol at below US$1 per litre for a while now.
However, Zimbabwe’s service stations are selling the same product on the pump at US$1,28 per litre due to layers of taxation. This has created room for arbitrage and fuel smuggling.
Zimbabwe, according to the Zimbabwe Energy Regulatory Authority (Zera) website, charges excise duty on fuel, a road levy, carbon tax, debt redemption levy and strategic reserve levy on top of other administrative expenses, effectively making formal fuel imports expensive.
As shown by the latest Zimra figures, tax collections under the excise head slid as, among other things, excise duty on fuel went down remarkably in the first quarter of 2016 despite continued car imports and heavy use of fuel powered generators as load shedding on the Zesa national grid persists.
- Zimbabwe Independent