- Reduction in the prices of essential goods is one of the key demands of former presidential candidate Venâncio Mondlane
- The government is also negotiating a reduction in toll fees
By Ricardo Dias
Maputo (MOZTIMES)—President Daniel Chapo declared on Sunday that the government will announce measures to lower the prices of essential goods.
One of the first decisions under consideration is the removal of Value Added Tax (VAT) on basic necessities, Chapo said after attending a summit of the African Union in Addis Ababa.
"The government is assessing the possibility of removing VAT on products such as rice, sugar, oil, and beans," stated a 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 a mistake made by Mondlane. 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, and last year the then Minister of Industry and Trade, Silvino Moreno, told parliament that the government has no intention of changing this policy.
However, the government did 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.
Chapo also said the government is seeking solutions to lower the charges paid at tollgates.
"The Ministry of Transport and Logistics is in discussions with Trans African Concessions (TRAC) and Rede Viária de Moçambique (REVIMO), the companies responsible for the main toll gates in the city and Greater Maputo metropolitan area, with the aim of finding a balance between the interests of the concessionary companies and the financial capacity of users," the note from Chapo's office stated.
"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, as quoted in the email statement.
The President also acknowledged the need to lower fuel prices to facilitate the entire supply chain and reduce consumer costs.
"There may be additional factors contributing to the current fuel prices, and as you know, when fuel is expensive, the final consumer pays the price," he explained.
Are the road tolls exorbitant, as Mondlane and his supporters claim? The charge for a light vehicle at the toll gate between Maputo and Matola on the N4 motorway operated by TRAC is 40 meticais. There are reductions for regular users and for public transport.
The toll gate at Katembe, on the suspension bridge over Maputo Bay, operated by Revimo, 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. (RD/PF)
