Remove the fuel subsidy, please

THE EDITOR: Oil prices have decreased because of a fall in demand resulting from covid19 containment measures.

Now is a timely opportunity to remove the fuel subsidy, thus lowering the knock-on impact on citizens.

The revenue gained from the removal of the subsidy will provide additional resources for the Government to respond with immediate interventions to address the covid19 crisis, in addition to an opportunity to shift resources into more productive spending for long-term recovery and resilience.

Removal of the fuel subsidy requires:

* Implementing a targeted reform plan that shields and protects the poor and vulnerable

* Phasing any price increase appropriately

* Effective communication

* Productive investment

* Implementing transparency mechanisms

The fuel subsidy is not a sustainable tool to lower poverty and provide resilience for the TT population because of the following:

* Distorted benefits

* Pollution

* Crowding out of public spending.

* Macroeconomic effects

* Corruption and smuggling

The present oil prices and covid19 present an ideal opportunity for reform. But governments are hesitant to remove fuel subsidies because of:

* Knock-on impact on citizens

* Social demand for cheap fuel

The Government needs to consider:

* A targeted reform plan

* Appropriately phased price increases

* A far-reaching communication strategy

* Investing in productive sectors

* Implementing transparency mechanisms

TT, we cannot have our rock cake and eat it too. The fuel subsidy is not producing any good here.

In the contrary, by keeping prices artificially low we are encouraging inefficiencies and waste for consumption. We are hampering innovation in technology and improvement on a wider front.

AV RAMPERSAD

Princes Town