EDITORIAL: Fuel subsidy plan should extend to all motorists


EDITORIAL: Fuel subsidy plan should extend to all motorists

Fuel subsidy plan should extend to all motorists
Fuel subsidy plan should extend to all motorists. FILE PHOTO | NMG

The guidelines on implementation of a State fuel subsidy raises questions about the rationale behind it. The subsidy is meant to ensure local motorists do not suffer steep price increases caused by global market changes.

Yet by curiously limiting it to diesel consumers, the Energy ministry could be unwittingly be using the price stabilisation tool to inflict suffering on one class of motorists while offering relief to another.

The justification given by the ministry officials for the decision when they appeared before Parliament this week is that diesel powers the economy.

It is widely used by transporters and in agricultural machines. Any fluctuation in its price usually has a ripple effect on the entire value chain, from traders whose goods are ferried to the consumer who eventually bears the extra cost.

On the face of it the rationale for the subsidy which will be effected once the global oil price surpasses $50 per barrel is sound.


Nonetheless, it is unfair to lock out private motorists, who mostly consume super petrol, from enjoying benefits of the subsidy which works like a hedging tool.

There can be no justification, certainly not when they are big contributors to the very levy that will raise Sh30 billion annually for the subsidy.

Fairness is one of the reasons the taxation system works. If the State is to require payment of a levy by taxpayers it is expected that they should get value for their money.

Without this, there is no incentive for private motorists to continue handing over their hard-earned money to the government while their welfare worsens.

And it is not far-fetched.

The costs of transport has a significant weighting in the basket of goods and services that is used to measure inflation in the country.

Leaving private motorists out will expose them to fuel inflationary pressure.

The State faces the risk of provoking the already tax burdened consumer to seek fairness through courts.

Rather than wait for matters to deteriorate to such level, the ministry should go back to the drawing board, consult and come up with guidelines that are fair to all consumers. The least it should do is ensure that the benefits are enjoyed by all.

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