Help me understand

[Okiya]

What would happen if the government stopped charging the 16% VAT on fuel as it cuts across all the players and do away with subsidy? ....... Just a layman musing out loudly

Just picture it this way, the annual tax revenue we collect is not enough to pay for our spending. So in layman, its like someone halving your salary but your expenses are still the same.

 

[ShakaZulu]

That VAT goes to government as revenue. It's a lot of money. They would have to find a very large sector of the economy and tax it to hell to generate the same revenue. Alternatively, they would have to cut government spending.

Would the oil marketers smuggle oil to neighbouring countries if the govt subsidized or decided not to tax fuel? And if the govt over tax fuel would the opposite happen where oil would be smuggled into the country?

 

[bigDog]

Would the oil marketers smuggle oil to neighbouring countries if the govt subsidized or decided not to tax fuel? And if the govt over tax fuel would the opposite happen where oil would be smuggled into the country?

Thats theoretically possible but I don't think they would do that in large scale. The government knows who has what fuel. You saw the CEO of Rubis being shown the door for messing around. Big players avoid making big blunders.