Belize bus transport operators have been in negotiations with government regarding rates. They are asking for $0.16/mile, while government has apparently agreed on a $0.10/mile across the board rate.
But the bus owners are not only talking about increase in rates….they are also requesting duty-exemption on the fuel.
Bus transport is of great importance
to Belizeans, as most Belizeans travel to and from work by bus….and the cost of transportation is now taking up to 20% of a semi-skilled workers salary.
Belize bus transportation is currently of two categories….the regular service, which stops at any point to pick up and drop off passengers…and the express service , which is a non-stop service in between the major transportation hubs. These different services do not currently factor in QUALITY of service....nor difficulty of traversing terrain. The express service is already charging BZ$0.12/mile….and there is no consumer tax on bus transportation. The buses are mostly over 20 years old, and regularly experience break downs.
In Mexico and Guatemala….the bus transport system has been developed along the lines of quality of service….also taking into consideration the terrain of the various routes.
A Class-A service from Belize City to Merida on ADO, a distance of 382 miles over 7.5 hours, mostly on flat terrain with mostly world-standard paved highway, will cost approximately $0.21/mile…including border crossing costs for the bus and consumer IVA tax of 8% paid on the Mexico-leg, as required by Mexican law. The price of diesel in Chetumal, ranges around BZ$6.30/gallon.
Class-A service from Santa Elena, Peten; to Guatemala City, a distance of 320 miles over 9 hours, a mix of 60% flat and 40% mountainous terrain, will cost approximately $0.19/mile…travel from Guatemala City to Quetzaltenango, a distance of 141 miles over 4 hours, mostly over mountainous terrain, will cost approximately BZ$0.13/mile….with no border crossings, but including consumer tax of 12%….on Linea Dorada, which is now a subsidiary of ADO of Mexico. The price of diesel in Guatemala ranges around BZ$8.89/gallon.
This Class-A service uses Pullman buses that are under 5-years old in Mexico (under 10-years old in Guatemala), with air-conditioning, TV, individual recliner seats, restroom, including snack/drink and non-stop service. In addition, they have satellite monitoring for speed and safety, central radio controls and back-up services. They very rarely experience breakdowns.
The Class-B and Class-C services in Mexico and Guatemala are much, much cheaper than the Class-A services….as much as 50% cheaper.
The government of Belize would do well to seek to make bus transportation costs competitive with our neighbors…..but it should do so along the same lines of quality of services.
By allowing price hikes to the levels charged by Class A services in Mexico and Guatemala….without requiring minimum standards of service….would be doing a disservice to the Belizean passengers….especially if fuel is also exempted from tax and no consumer tax required. They should set the minimum standards for various classes of service....with their different rates...and their minimum requirements for licenses. Bus operators should meet these standards BEFORE they can implement the class rate for which they are approved license...otherwise, like so many things in Belize, consumers will be charged Class-A rates for Class-B and Class-C services....and "the lee breeze weh just blow ova".
I have proposed removing ALL taxes on fuel in Belize….with the objective of making the pump prices in Belize the closest possible to the pump prices in Mexico. This will increase our general competitiveness vis a vis Mexican and Guatemalan producers of goods and services. At the same time, implementing a lower GST rate of 10% across the board on everything that we consume, including bus fares. This will shift taxation away from the level of production...and put it at the level of consumption....yielding a much more competitive economy for all to benefit from...including Government revenues will increase significantly...allowing us to pay our bills.
I can understand if the government is doing a Proof of Concept (POC) with the bus transport sector….by exempting fuel taxes only for this sector at this time….and implementing a 10% GST on bus transport….to recover some of the taxes that will be lost by fuel tax exemption.
However, this kind of partial implementation of a concept….needs to take into consideration the fact that it is only PARTIAL…..and should not be expected to reflect the results that the WHOLE concept proposed will yield if implemented across our entire consumption tax base.
When consumption tax is levied across our entire consumption tax base….including corn, rice, beans, chicken, eggs, fresh meats, vegetables, etc……only then will the true results of lowering GST to 10% from its current 12.5%.....and lowering pump prices of fuel to levels in Mexico….be optimally compensated for.
Lowering pump prices to levels of Mexico….will lower the cost of production of all our basic consumption of corn, rice, beans, chicken, eggs, fresh meats, vegetables, etc…..such that the 10% GST could be charged on them, even as the consumer price on these basic commodities are lowered, or producers can gain from higher profits….both of which are good for investments and growth of our economy. We will create a more balanced and fair economy…..instead of the lop-sided economy we now have where only a few producers are getting filthy rich…..while the rest of us have to pay high taxes to compensate for their free ride. Many more of our existing industries…and new industries….will be able to become profitable and invest in expansion with this policy.
Those producers of corn, rice, beans, chicken, eggs, fresh meats, vegetables, etc…..will stand to gain significantly from this proposal….because their cost of production will decrease to levels that will make them sustainably competitive in regional markets, which are much larger than the small domestic market that Belize offers. They should understand by now….that it is better to make $0.10 per pound selling 10 pounds of corn…..than to make $0.15 per pound selling only 2 pound of corn. Our country has invested greatly in their success thus far by fully protecting their domestic market from import competition….and they are now at the level of scale and capital that allows them to spread their wings further across our borders into countries with much larger consumer demand.
This should be about constructing a competitive economy….not only about constructing competitiveness for the bus transport sector. We should not lose sight of the whole pie….even as we take a bite out of it.
WAKE UP BELIZE!!! Capital Newspaper