Cape Verde Watchdog Calls for Fuel Tax Relief Amid Price Spikes
The Consumer Defense Association of Cape Verde (Adeco) is calling on the government to reinvest surging tax revenues into the economy to shield citizens and businesses from the recent spike in fuel costs.
Tax Gains Should Protect Consumers
As fuel prices skyrocket, the government’s Value Added Tax (VAT) receipts have grown in absolute terms. Marco Cruz, a member of the Adeco board, argues that this unexpected fiscal windfall provides the government with the necessary “fiscal leeway” to support the nation’s most vulnerable sectors.
“In this scenario of extraordinary fuel price increases, the government’s revenues rise automatically through VAT,” Cruz explained. “This extra revenue can be used to favor sectors that deal with food production and processing, as well as those that rely heavily on diesel for their productive activities.”
Targeted Relief for Critical Industries
Adeco is urging the government to grant specific tax benefits to key industries to prevent a domino effect of price hikes across the economy. The association identified several sensitive areas that require immediate attention:
- Food Production: Protecting agricultural and processing sectors to keep grocery prices stable.
- Energy Production: Providing “positive discrimination” for electricity generation to prevent utility bills from soaring.
- Public Transport: Ensuring commuting costs remain affordable for the general population.
Cruz emphasized that by using the fiscal surplus to buffer these sectors, the government could stabilize the entire economic chain without compromising its original budget goals.
Long-term Stability Strategies
Beyond immediate tax relief, Adeco proposed the creation of a specialized stabilization fund designed to “buffer increases during periods of international market shocks.”
The plea comes as fuel prices in Cape Verde surged by an average of 10.7% in October, tracking international market trends. While the government has already implemented mitigation measures for butane gas, Adeco argues these protections must be expanded and applied more broadly.
Responding to the growing pressure, Prime Minister Francisco Carvalho confirmed last week that the government is currently reviewing 2019 legislation. The goal, according to Carvalho, is to develop “more effective instruments for stabilization and protection” for families, the transport sector, fisheries, and private businesses.
Image: Pexels – Erik Mclean
