Is Petroleum Tax Moratorium (Freeze) Necessary to Easy Economic Hardship?

Global economies have been showing signs of recovery from one of the longest economic recessions. However, the current resurgence in the price of oil, is by far the single biggest threat that is likely to wipe the few gains made on the economic front. High cost of oil is slowing down economic growth across the board. High unemployment, deeply entrenched toxic debts, inflation, and so forth in many developed economies, are exposing the fragile nature of the global economy. Developing nations on the other hand are being hit particularly harder, with their citizens resorting into mass action due to their inability to feed themselves.
Tanzania is amongst countries experiencing chronic energy shortage, and could join some of the economically  troubled countries should speculation continue to drive oil prices further, proportionally to the cost of food , and other basic necessities. Unrest in the Middle East, and North Africa, increasing demand for oil in the Asian continent, declining supply of oil in the global market, and now a disaster in Japan, have been the driving factors behind the sudden resurgence in the cost of oil in the commodity markets. And once Japan switches into the recovery mode, we should expect to pay more for petroleum products. This will most likely cripple the economic recovery, and further weaken the already fragile global economy
Productivity has declined significantly in many developing nations including Tanzania. The daily rise in the price of oil has regenerated into economic hardship , giving birth to the new wave of social and economic unrest amongst youth  in these developing nations; the pattern precipitated by the inability to afford food by many citizens. The cost of oil is placing a strenuous impact on transport, cost of food, freight, and the entire supply chain. Four months ago, one liter of gasoline was Tsh, 1,680, today the same liter is Tsh,1,980 an 18% increase. 1 kilogram of sugar was Tsh. 1,200, today the same kilogram is Tsh. 2,000 a whopping 67% increase. One kilogram of rice was Tsh. 900 a few months ago, today the same kilo fetches Tsh 1,400, and the list goes on.
In general, commodity prices have sky rocketed across the board in the recent months, and the increase can be attributed to many factors including the high cost of petroleum, whereby  the high cost of equipment and farming input, production, processing, and  transporting commodities must be passed on, back to the consumer in the form of high prices. To curb the rising cost of food, it is necessary for the government to think of temporary drastic measures such as extending incentives to domestic farmers in the form subsidies on farming input and equipment, as well as Interest free loans.

Subsidization of petroleum, Imposition of tax moratorium on all commodities and petroleum products, and also the adoption of STRICT commodity price regulation, that will deter greedy merchants from exploiting consumers. These temporary measures will ease the economic pain, by leaving more money in the pockets of the consumer, which will in turn maintain economic activity. This is my idea, what do you think?
Mungu Ibariki Tanzania
John Mashaka
Dar Es Salaam, Tanzania

1 comment:

Anonymous said...

We drink one another's health and spoil our own.