The Tribune

By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Government has decided to allow import duties on fuel products to be based on the Freight on Board (FOB) measurement in a bid to lessen Value-Added Tax’s (VAT) impact on the sector and the Bahamian public.

Michael Halkitis, minister of state for finance, recently revealed that the currently-used Cost, Insurance, Freight (CIF) standard for calculating due Excise Taxes would be ended in favour of FOB.

Without including VAT, which is set to be levied on January 1 at the rate of 7.5 per cent, the Government currently receives $1.06 per gallon plus a 7 per cent Stamp tax on imported fuel.

“We don’t expect to have that full impact because we are doing some adjustments in terms of the CIF, and we have already made the amendment in terms of the $1.06 plus the 7 per cent,” Mr Halkitis revealed.

Responding to a question on government taxes on fuel while speaking at the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) VAT seminar on Tuesday, Mr Halkitis said: “When we did the legislation we amended that formulation, so that it is just a dollar figure; it’s not the 7 per cent. There will also be an adjustment in the whole CIF consideration.”

Petroleum retailers and wholesalers also operate on fixed margins. In October 2011, the Ingraham administration increased gasoline and diesel margins by $0.10 and $0.15 per gallon, respectively. Gas retail margins had been previously fixed at $0.44 per gallon and $0.19 per gallon for diesel.

The margin on gasoline now stands at $0.54 per gallon for retailers, and $0.33 for wholesalers. Diesel is $0.33 for retailers and $0.18 for wholesaler. Gas prices are currently between $5.24 to $5.44 between the three major fuel companies.

Oswald Moore, head of the Bahamas Petroleum Retailers Association (BPRA), said he was not prepared to offer comment on the matter when contacted yesterday.

Another petroleum industry executive told Tribune Business: “We are still in discussions with the Government, trying to get the full idea of how it works. As far as I am aware VAT is applicable to fuel. We are still trying to get better clarity on how it will work.”

The move to allow Excise Taxes to be calculated on FOB, as opposed to CIF standard, is also being done with the Bahamian auto industry.