An Economist says the move by government to reduce Value Added Tax (VAT) on fuel is a poor strategy as it only affects fuel prices in the short term.
In an Interview with Money FM, Trevor Hambayi said fuel prices will still have to be hiked as the Kwacha will continue to depreciate due to little economic growth.
‘‘Unfortunately, with this (VAT reduction), government is dealing with the secondary problem and not the primary problem,’’ Mr. Hambayi said.
‘‘Fuel prices is a secondary problem, the primary challenge is economic growth within the country which has to add value to the Kwacha.’’
He further added that the Energy Regulation Board (ERB) is not upholding its mandate of regulating fuel prices as it was suppose to increase the price of fuel due to the continued depreciation of the Kwacha.
‘‘Bad precedence has been set as ERB failed to run the pricing of fuel as per its institutional mandate,’’ he said.
And Mr. Hambayi disclosed that government will lose about K5.1 billion in revenue due to the reduction of VAT on fuel.