Chapo promises to cut cost of living

Maputo, 17 Feb (AIM) – Mozambican President Daniel Chapo announced on Sunday that the government plans to take measures to reduce the cost of living, including cutting the cost of the tolls motorists pay at the toll gates on the approaches to Maputo.

Speaking at a press conference after his return from the African Union summit in Addis Ababa, Chapo said the Ministry of Transport and Logistics is in negotiations with Trans-Africa Concessions (TRAC) and the Mozambican Road Network (Revimo) which operate the main tollgates in question.

The purpose of these discussions, according to a note from Chapo’s office, is “to find a balance between the interests of the concessionary companies and the financial capacity of the users.”

“We now need to hear all perspectives, and we are absolutely certain that we will find better solutions to ease the burden on Mozambicans,” said the President.

The complaint often heard is that the tolls are too high. In recent months, many motorists have simply refused to pay, and the police are no longer trying to enforce payment. Refusal to pay is by no means universal, and some motorists told reporters they thought it reasonable to pay a toll to the company which built the road and has a contract to maintain it.

But can the tolls really be described as exorbitant? At TRAC’s tollgate between the cities of Maputo and Matola on the motorway to South Africa, the toll for a light vehicle is 40 meticais (about 62 US cents). There are discounts for frequent users and for public transport.

The motorists objecting to a 40 meticais toll seem to have no difficulty in paying for fuel. Petrol currently costs 86.25 meticais a litre, and diesel 91.23 meticais a litre.

The other critical tollgate is at Katembe, at the southern end of the suspension bridge across the Bay of Maputo, and it is operated by Revimo. Here the toll for a light vehicle is 125 meticais.

Before the bridge was built, motorists wishing to cross the bay had to use a ferry, and the fares charged by the ferry were not cheap.

In 2018, the year before the bridge opened, the charges for using the ferry were 250 meticais for a light vehicle, weighing up to a tonne, on weekdays and 300 meticais at weekends. Cargo and passenger vehicles with a gross weight of up to 3.5 tonnes paid 400 and 450 meticais.

In other words, the tolls charged for motorists to use the bridge are considerably cheaper than the fares that used to be charged by the ferry.

Chapo also announced that the government is considering removing Value Added Tax (VAT) on basic necessities,

“The government is assessing the possibility of removing VAT on products such as rice, sugar, oil, and beans,” stated the note from Chapo’s office. “We are carrying out this assessment, and in the coming Cabinet meetings, we will announce the outcome to ease the cost of living for Mozambicans” the note added.

Chapo thus repeated the same mistake made by former presidential candidate Venancio Mondlane when he demanded that the government reduce prices. For there is not, and never has been, any VAT on basic foodstuffs.

Rice, maize, maize flour, bread, milk, potatoes and onions are all zero rated. VAT has never been charged on these goods.

However, the government does not regard processed foods, such as sugar and cooking oil, as basic goods.

Prior to 2007 sugar, cooking oil and soap were all subject to VAT. But as from that date, at the request of the processing industries, the government exempted them from VAT. This was a protectionist measure, intended to allow Mozambican industries to compete against foreign competitors.

As from January 2024, the government lifted the exemption from VAT enjoyed for the previous decade and a half by sugar, soap and vegetable oil. As from early 2024, these goods all paid VAT at the standard rate of 16 per cent.

The government could conceivably reinstate the VAT exemption on these goods, but it is doubtful that this would satisfy its opponents.
(AIM)
Pf/ (684)