SAN SALVADOR (AP) — The Salvadoran Legislative Assembly on Tuesday approved amendments to the law to give effect to a differentiated discount of value added tax (VAT) to lower the price of fuels to alleviate the economic crisis that citizens are experiencing.
With the votes of 81 of the 84 deputies of the Unicameral Congress, the initiative of President Nayib Bukele was approved. Special gasoline will have a discount of 4.75% of VAT, regular gasoline will have a 5% reduction and diesel 1.75%.
Congress recently approved the three-month suspension of the collection of two fuel taxes, resulting in a reduction of 28 cents in the price of a gallon. These two levies were used to pay the pensions of war veterans and the public transport subsidy.
In El Salvador, consumers pay 13% tax for each gallon they buy, regardless of whether it is gasoline or diesel.
As a result of the high international price of oil, the Ministry of Economy announced that starting Tuesday fuels will rise between 32 and 43 cents nationally. According to this new rise, special gasoline or higher would be selling at $4.91, but by eliminating two taxes and reducing VAT, the final price will be $4.31. Regular gasoline, which marks $4.72, will sell at 4.15 and diesel at $4.67 remains at 4.1.
The government announced that this differentiated VAT reduction will be in effect from March 23 to April 5.
In order to alleviate the economic crisis accentuated by Russia's invasion of Ukraine, tariffs were abolished for one year on 20 products, including cereals, oils, butters, wheat cereal, fruit and vegetables, and animal feed.
The government also announced that the subsidy for propane gas will be increased for one million households, no increase in electricity rates will be allowed and public transport will not be increased, as employers continue to receive a subsidy.
Meanwhile, the government is conducting an intensive inspection campaign at shops, gas stations and transport units to verify that they are not taking advantage of the situation and raising rates.
Authorities have already suspended permits for 293 transport units of a businessman who is being prosecuted in court for violating the law and have also arrested several motorists for raising fares and abusing passengers. The government announced that it will auction the permits and in the face of urgent service, soldiers, police and government employees will manage the transport units to avoid the stoppage. At the moment, the ticket is not being charged.
Bukele warned carriers who do not respect the law that they will face the same fate as the businessman. “Don't play with fire.”
The president added in a message to the nation that the crisis facing El Salvador does not have its origin within the country, but is global and is aggravated by the conflict in Ukraine.
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