Higher Fuel Taxes Driving Togolese Motorists to Black Market
15 June 2011
Higher fuel taxes in Togo are driving motorists to the black market for gasoline and diesel as service stations lose customers to the illegal trade.
A five percent increase in Togolese fuel taxes has created a thriving black market for motorists unwilling to pay the equivalent of $1.24 for a liter of unleaded petrol when that same fuel was previously $1.18 per liter.
Lome motorbike taxi driver Aboubakar Dare says higher taxes cut into his profit.
Fuel prices are rising on the world market. There is nothing Togolese can do about that, Dare says, but the government has to do something about it.
Service station attendant Paulin Amevo says black market fuel merchants setting up shop by the side of the road are undercutting commercial service stations.
Amevo says black market traders next to his service station are stealing customers because 1,000 francs no longer buys two liters of fuel from a service station while the same 1,000 francs buys more than two liters on the black market. Amevo says consumers know buying fuel on the black market could damage their engines but they prefer the lower prices.
Togo's government says fuel subsidies that cost it $10 million in the first five months of the year are unsustainable and were dragging down the budget.
Togo's Trade Minister Artheme Zunu says the fuel tax increase is fair because it was limited to five percent and came with the elimination of other consumer taxes to lessen its impact.
World fuel prices near 10-year highs are driving up the cost of transporting food. That has contributed to demonstrations in Kenya, Sudan, and Burkina Faso.
Kenya lowered taxes on diesel and kerosene in April. Uganda scrapped its tax on paraffin but maintained petrol and diesel levies. Rwanda last week cut its fuel taxes to contain inflation.
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