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Laos government taxes adding 30% to fuel prices: Economists
The government could lower the price of fuels in the domestic market as a measure to curb the nation's rising inflation rate.
According to a study by the Lao National Economic Research Institution, government taxes and fees account for 30 percent of the current fuel price in Laos, providing an opportunity for the government to lower fuel prices and alleviate pressure on household budgets.
At present, fuel prices in Vientiane are 11,840 kip per litre for premium petrol, 10,820 kip a litre for regular and 9,520 kip per litre for diesel.
Fuel prices in the provinces vary according to transport costs, but premium petrol currently ranges between 11,860 and 11,980 kip per litre, regular 10,860 and 11,090 kip a litre, and diesel between 9,560 and 9,820 kip per litre.
Fuel prices in Laos are higher than in neighbouring Thailand, where diesel is around 8,300 kip per litre, regular 9,600 kip a litre and premium 10,000 kip per litre. Lao fuel prices are even more expensive compared to prices in China.
The government plans to add a surcharge to fuel prices to replace revenues lost from the cancelling of some bridge tolls. The decision to cancel some bridge tolls was an effort to streamline transportation and boost production activities in the country.
According to the study, the communication and transport, and food categories of the Consumer Price Index have become the major driving forces of rapidly increasing inflation in Laos. Prices for goods in the categories have surged in conjunction with rising fuel prices in Laos and around the world this year.
Economists at the institution said that they did not want to say whether or not the government should subsidise fuel as a measure to slow the inflation rate, as that is a decision for policy makers to make. They also said that the government would lose large amounts of revenue if it reduced taxes and charges on fuel imports as they are a major source of state revenue.
The Ministry of Industry and Commerce has said that the government would subsidise fuel prices if the price of diesel rises above 11,000 kip per litre.
Bus operators have also said they will request an increase to transportation fees if the price of diesel climbs above 11,000 kip a litre.
The institution has launched a study into the price structure of goods in Laos, aiming to provide references for the government to implement measures to address rising inflation, which reached 9.24 percent in April, 9.79 percent in May and 9.52 percent in June.
The institution expects to complete the study next month to facilitate the government's efforts to tackle the rising inflation rate.
vientiane times
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