Sunday, January 4, 2009

Memo to the Government: Increase our Gas Prices.

The title of this entry surely sounds counterintuitive. The world is in its biggest economic crisis since the Depression; the Belizean tourist market, our most lucrative industry, is faltering; and the cost of food (and living in general) has increased dramatically. Yet, the lone proverbial gem among this economic despair has been the significant decrease in the cost of fuel - a boon to drivers across the globe, especially in Belize where prices have fallen almost 70%. However, this latest development in the ephemeral saga of oil prices warrants careful discussion about how the government should proceed with its tax policy on fuel.

The price of fuel has hovered between $9 and $11 for the past several years. And despite such steep prices, few Belizeans truly changed their driving habits. Teenagers still proceeded with their obligatory "circles" around the city (with the windows up and the A/C at full blast). Moreover, with a bus system in utter disarray, many adults had no choice but to pay the exorbitant price of fuel to get from home, to work, to the store, to school etc. Belizeans simply kow-towed to our insignificant place on the world stage, and understandably so; a population of 300,000 will never affect the price of any commodity, let alone fuel. We have no choice but to take the price given when the tanker enters our waters.

But amidst the ecstasy of $4.85/per gallon fuel, there are other issues to consider aside from prices. For example, drive anywhere in Belize City, or even in many out-district areas, and our vehicles suffer immense wear and tear from the honeycomb of potholes that dot our streets. The infrastructure of our country has been battered by floods, hurricanes, and the ever-increasing amount of cars on the road. To fix these roads cost money - money that our government does not have. Therefore, it behooves the government to take advantage of the present reduction in fuel prices to collect a higher tax. Of the current $4.85 we pay at the pump, the government collects $1.70, or 35%. If the government decided to collect $2.00 (40% of the price), the price of fuel would then be $5.15, still a dramatic decrease from the status quo of the past several years. The money obtained from these taxes should be used to support infrastructural development, particularly our dilapidated streets. Simple math sheds light on the benefits of this plan: assume there are 10,000 cars in Belize City and that each car on average goes to the pump every 10 days. And at each visit to the pump they put in, on average, 14 gallons of fuel. With a gas tax of $2.00, the government would collect $280,000 every 10 days. Finally, assuming that it takes one million dollars to pave a mile as it is commonly said to cost, it would take the government 40 days to collect the funds needed to pave one mile of road.

I have mentioned this proposal to several people and many have remarked that it is not politically feasible because people would not allow the government to stand in the way of the lowest possible price, especially when the motto of 'tings haad out ya' dominates the social milieu. Yet, this is a promising opportunity to put politics aside in place of reason. When gas prices eventually rise, the government can simply reduce the gas tax. Prices will not stay this low forever and hence, requires swift action to take advantage of its potential benefits for the infrastructural development that our country so desperately needs. Thoughts?


miriam said...

I'm in perfect agreement and have been saying the same thing to my colleagues at work since gas prices started falling.
There are even greater implications for society if prices are not kept relatively stable. People who have a few extra dollars in their pockets inevitably try to improve their standard of living with "extras". Those extras lead to serious financial woe if the money for the extras is paid in monthly installments from a fixed budget. When the price of gas increases, suddenly there is no money for the item on credit and the budget goes out the window.
Tax the gas a bit more and help those of us who push the budget to the limit.

Democrates said...

Indeed. I used infrastructural development as just one example of how beneficial an increase in gas taxes could be for the Belizean society. But as you alluded to, it could be used in a variety of other sectors.

V said...

No man, government should keep the fuel prices as low as possible. There are other ways to collect taxes to pay for infrastructure development.

Anonymous said...

Very lovely idea! We would bitch to noooo end though. We prefer to do the "one day bellfful.." thing rather than think long term while at the same time still complain in the long run about the conditions of our streets etc.

The lack of sensibility of my fellow Belizeans never fails to amaze me... but I still have hope. I think GOB should just go through with it. ignore the bitching and whining and when they do produce as a result of this action, i think we would be happy with the foresight that they had.. or you, as the case may be :P

The Voice said...

You're a radical of the premier kind, Democrates.

What this reminds me of, however, is a conference I attended of an Canadian environmentalist. Pollution is a problem in these large countries. He was suggesting that governments implement a carbon tax and dollarize emmissions. Doing so would double the going rate of gas and gas related products immediately.

The money to do work has to come from somewhere. It is hard to be in a decision-making capacity, but for all intents and purposes I agree with your point-of-view.

Of course, I would be the first to complain about the higher cost of gas. But I won't have a car for much longer if I sink into one more DAMN pothole in Belize City.