Published by Annelia Nixon, Tribune News, September 16th, 2024
The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) has called on the Government to lower petroleum taxation as part of a compromise to give relief to gas station operators.
The private sector advocacy group, in a statement to Tribune Business ahead of Wednesday’s planned protest by petroleum retailers to coincide with Parliament’s return, said that reducing the level of per gallon taxation could create space to give the dealers their long sought-after margin increase without raising pump prices for consumers.
“The BCCEC has observed the ongoing dispute between the Government and the petroleum retailers and watched with cautious consideration,” the Chamber said. “On one hand, we empathise with retailers who have noted the consistent increases in the cost of doing business with the contrasting decline in the ease of doing business that has had a damaging impact on their bottom line.
“While, on the other hand, we note the impact this will have on the general public, many of whom are entrepreneurs. The BCCEC recommends that perhaps the Government would consider reducing their tax rate charged on petrol, thereby allowing the fuel dealers to realise the increase they seek without the increased fuel cost to consumers, especially in view of recent inflation.
“We believe this is the more amenable approach, which will allow a sensible compromise between the retailers’ request, government’s response and consumer well-being that avoids any industrial unrest. With increased visitor arrivals and recently announced developments, the Government should be able to make up this revenue while helping to contain the cost of living.”
Besides the 10 percent VAT, the Government also gains $1.16 on every gallon of gasoline sold at the pump. Thus the Public Treasury earns more per gallon than the 54 cent and 34 cent price-controlled fixed margins enjoyed by dealer and the three wholesalers - Esso, Rubis and Shell (FOCOL) - respectively.
However, Michael Halkitis, minister of economic affairs, has repeatedly ruled out reducing petroleum taxation as a means to both make room for a margin increase and ensure there is no rise in pump prices for consumers. His argument has always been that the Government would have to make up for the revenue foregone by increasing taxes elsewhere.
But Bernard “Porky” Dorsett, owner of Porky’s Rubis Service Station, passionately expressed to Tribune Business that the “model must change” for Bahamian petroleum retailers to survive. Had he known he would now be fighting to increase gasoline margins from 54 cents per gallon, he added that he would never have entered the industry some 52 years ago.
“We’ve been working with 54 cents from the days of Hubert Ingram in 2011. That is unconscionable. Fifty-four cents on a gallon of fuel. Fuel has gone to the price of over $7 at one point in time. We were selling fuel at over $7 to make 54 cents. That don’t make no sense,” he argued.
“I’ve been here now for 52 years and I’m telling you, if I ever dreamt this is where it was going to end up, I don’t think I would have ever gone into business.” Peter Roker, operator of Roker’s Gas Station, told Tribune Business that gas stations are barely making a profit but, despite that, employees must be paid.
“You got to pay your light bill, you got to pay your staff, you got to pay your rent, you got to pay everything, all of that. That’s totally impossible and what is happening right now is really unconscionable,” he added.
He and Mr Dorsett explained that, while gas station convenience stores have Business Licences of their own and are separate from the fuel operations, it is sales from this area which are barely allowing operators to get by and make ends meet. “We have to thank God that we have convenience stores. Other than that, 90 percent of us would have closed a long time ago,” Mr Roker said.
Explaining that the petroleum retailers have no quarrel with this particular administration, Mr Dorsett said: “We don’t have a problem with the public. The public is our customers but we can’t continue to struggle like this. The public probably don’t expect us to struggle the way it is.”
Mr Roker added: “We are on the consumer’s side, OK? That hurts the consumer. And the consumer knows the plight we’re going through, and they sympathise with us. We’re not only fighting for ourselves. Most of these gas stations hire as many as 30 to 40 people. What happens to them?
#“If we have to stand there and die we will make this thing work, because it’s unfair and unconscionable for a section of the Bahamian community not to be able to be given the opportunity to make a living.”
Describing price controls as antiquated, Mr Roker added: “That is so old fashioned. Price control really is a very old-fashioned method of doing things and, when I say price control margin, the margin control, not the price control. In other words, the big difference is this. The gas retailers are on a fixed margin that is impossible to work with in business.”
Mr Dorsett and Mr Roker both said the Government is misleading the public into believing Bahamian petroleum dealers are “rich”. “The Government has continued to run the stupid thing to the public that we are the rich people who try to fight them. Our job is not, and our fight is not, against the public,” Mr Dorsett said. “We don’t have a fight. No one should be forced to run a business the way it’s being run.
“For the last 15 years, the last three governments, none have had our interests. They use us like a top. They [say]: ‘Oh, every time the price of gas go up, oh, they’re making money’. The Government make more money every time the fuel gets there. Their margins are based on a percentage. Our margin is a fixed margin. When gas at $5, $6 a gallon, $7 a gallon, the VAT on $7 a gallon is 70 cents. We still making 54.”
The Prime Minister’s press secretary, Keishla Adderley, on Thursday said: “We understand there are grievances. This is an ongoing matter. Obviously the gas retailers are seeking increases. I can tell you that talks have continued with the office, in particular the Ministry of Finance, to come up with a formula.
“Obviously the government is concerned about the health of those businesses, but it’s equally concerned about placing any undue burden on consumers. The focus continues to be on coming to a consensus, creating a formula that will be mutually beneficial and not over burden either party.”
Taxi driver, Newell Bullard, when asked about the situation, simply replied: “With me driving taxi, I’ll be charging people more money to compensate for that.” Two other motorists queried if and how a potential increase might affect them. They both told Tribune Business that, while they sympathise with gas station operators, as consumers they do not want the situation to negatively impact them or the price of gas.
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