Over half of gas price is tax

The immediate threat of a fuel crisis is over, and fuel dealers will have the chance to meet with government and work out their differences over the next month or so. But if those station operators are going to receive the bigger slice of the pie they say they need, where will it come from? To help answer that question News 5 has put together a breakdown of exactly where the money goes when you fill up your tank. We’ll use as our model a single gallon of premium gasoline that arrived in the country in the shipment of October fourteenth. It currently sells at the pump in Belize City for six dollars and eighty-one cents.

The first cost of that gallon, paid by sole importer Esso when it arrived on the tanker, was one dollar and ninety-seven cents. When you add handling fees, port dues, insurance and other charges totalling seventeen cents, you arrive at an actual landed cost of two dollars and fourteen cents. This is the price paid by the three fuel marketing companies, Shell, Texaco and Esso, for a gallon of premium.

Next come the taxes. Import duty is a flat forty-five cents. Sales Tax adds another thirty cents, while environmental tax tacks on two cents more. The real bite comes from revenue replacement duty, the notorious R.R.D. In this case the R.R.D. comes in at a whopping two dollars and ninety-seven cents.

So when you add up all the taxes you get a total of three dollars and seventy-four cents, which when added to the cost of the gasoline, puts the price at five-eighty-eight–and it hasn’t even reached the gas pump.

That cost, for delivery and freight, is seven cents per gallon. The fuel companies then take their profit margin, pegged at a fixed forty-one cents, followed by the retail dealer, who takes forty-five cents. Add up all the numbers and you reach the price paid by consumers: six dollars and eighty-one cents.

To save viewers a session with their calculators, we’ve already done the math. It shows that the original cost of the fuel represents only thirty-two point five percent of the pump price. Taxes constitute fifty-five percent, while company and dealer margins are six and six point six percent respectively.

Now there are several additional points which must be noted. The first is that these percentages only apply to this particular shipment. As the acquisition price fluctuates, so does the breakdown of costs. For example, if prices go down, the percentage margin for dealers and fuel companies goes up…and of course vice versa.

As for R.R.D., that figure can be changed by statutory instrument, and government regularly lowers or raises the amount in order to stabilise the price at the pump… having first insured that vital revenues are maintained to meet the national budget and cost of foreign exchange.

Another important factor, one that may figure in future negotiations, is the question of cash flow. The dealers must pay for their stocks of fuel up front: no cash, no gas. But the fuel companies–Shell, Esso and Texaco–are allowed credit in paying the three seventy-four per gallon in taxes. Those payments don’t come due until the end of the month following the sale. The Esso terminal, by the way, is considered a duty free zone and the tax clock does not begin to tick until the bowser hits Caesar Ridge Road.

With Budget Minister Ralph Fonseca having already assured consumers that any added margin for station operators will not come from their pocket, there seem to be only two possible sources: the fuel companies or public treasury. Of course the ideal solution for all concerned is a radical decline in the world market price of petroleum… but given the present international situation, that prospect is about as likely as snow in the Mountain Pine Ridge.