A number of smaller retail gas stations in Trinidad and Tobago have been forced out of business in recent years. Gas station owners have been especially hard hit by increases in taxation that have significantly increased their costs while, under the law, they are operating on fixed margins. The tax changes that have led to this situation have been the increases of Green Fund and Business Levy which are paid based on gross revenue not profit.
While these changes to taxes sound small, for the petroleum retail sector which operates within a highly regulated industry, it is a huge blow. The Green Fund and Business Levy are calculated on gross revenue and the recent increases in both the percentage of these taxes and the increases in fuel prices mean that gas station owners face a significantly higher tax bill. At the same time, the actual margin from the sale of fuel that they receive is set by law and has remained unchanged for a decade. This means that the gas stations owners have seen their costs sky rocket and their net income remain unchanged, pushing many into the red. This has forced some gas stations out of business.
Around the Couva and Point Lisas area for example, there were traditionally three gas stations serving the community. Now, only one gas station remains open with a supply of fuel. It is often overcrowded and lines of cars waiting to fill up often spill out of the gas station and onto the busy Couva main road.
In October 2016, the Downstream Energy Sector TT group was formed to dispel a lot of the misconceptions about the industry and to provide credible information. According to their website, due to widely held misconceptions and an impending collapse of the downstream fuel industry, a committee was formed to help clear up key misconceptions about the industry and work towards the repositioning of the industry to a state that would be sustainable and beneficial to the country.
In a document which was released in 2016, the group suggested that changes to the regulations would have an impact on the price per litre at the pump. The document, “Collapse of the Liquid Petroleum Fuel Industry – Supplement 1” goes into detail on the possible changes and impact it may have on the public.
The report suggests that if the proposal is accepted (which has been made to the Ministry of Finance ahead of the budget recommendations), premium should be increased by 7.5%, super gasoline by 12% and diesel by 26.7%. After the increases, it would mean that premium will change from $5.75 to $6.23/l, super will move from $3.58/l to 4.06/l and diesel will move from $1.98/l to $2.58/l. The report also says that the maximum increase that would be experienced is $169.36 per month for a private individual and for a maxi taxi driver operating the longest route, the increase would be less than 50¢ per passenger. It also notes that a taxi that uses the route San Fernando to Port of Spain would also experience a cost increase of less than 50¢ per passenger.
The group contends that given the current structure of the margins earned by the gas stations, wholesalers and peddlers, they are not able to cover costs for administration, operating expenses and Green Fund and Business Levy which are paid on gross revenue not profit. This situation has the potential to significantly impact the distribution and availability of fuel to the motoring public.