Govt scraps fuel rebate

Tinashe Makichi
The government has scrapped the rebate on fuel following the movement in the exchange rate.  The Reserve Bank of Zimbabwe (RBZ) devalued electronic balances in February and introduced an interbank forex system under a managed float with a starting rate of 2.5 to the US$.
George Guvamatanga, the permanent secretary of the Ministry of Finance and Economic Development, says Statutory Instrument (SI) 72 of 2019 on the fuel rebate contained a sunset date of February 22 for businesses to claim the reimbursement.
“So there was a sunset clause in SI 72 and that is 22 February and the moment the exchange rate moved then the rebate was gone,” said Guvamatanga on Tambarara (an online streaming service).
According to the SI the fuel rebate regulations shall be deemed to come into operation on January 13, 2019 up to February 22, 2019.
There are, however, growing fears that the removal of the rebate and the expected removal of duties on the current fuel price, in order to match the prevailing exchanging rate, is likely to trigger a further price increase by fuel suppliers.
Under the present structure, the government collects $2.05 per litre for diesel and $2.11 per litre for petrol as excise duty on the price of $3.20 and $3.39 respectively. Previously, when the new prices were announced in mid-January, diesel was retailing at $3.11 and petrol at $3.34.
The government insists that it has done away with the 1:1 exchange rate and this only means under the current price regime, fuel is still being subsidised.
Contacted for comment, Energy and Power Development Minister Joram Gumbo said he was not aware of the scrapping of the rebate and referred the questions back to Guvamatanga.
Sifelani Jabangwe, the president of the Confederation of Zimbabwe Industries (CZI), said the removal of the fuel rebate will have minimum impact on the industry because most companies had already adjusted their pricing in relation to the fuel price increase as well as its non-availability, which saw some of them buying from the black market.
The CZI has been involved in consultations with the Zimbabwe Revenue Authority (ZIMRA) regarding the implementation of the fuel rebate system, which was gazetted last week, though in retrospect.
SI 72 limits refunds to beneficiaries who do not have outstanding tax liabilities, and in instances where such tax liabilities exist, Zimra deducts the debt and refunds whatever amount left to the beneficiary.
Furthermore, application for rebates – which are made through Form Ex FRF 2 – are only made by companies that are duly registered and have tax clearance certificates, invoice, or receipts from fuel suppliers, and documented proof or productive use of the fuel.
There had been strong criticism that the fuel rebate system added to bureaucracy and was an unnecessary move, given that ZIMRA was already struggling to refund Value Added Tax.

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