The price per gallon of fuel may have a significant reduction, the president of the republic, Nayib Bukele, announced last night, in order to minimize the economic impact of the armed conflict waged by Russia, Ukraine, and the North Atlantic Treaty Organization (NATO).
The president reported that he sent a proposal to partially suspend the collection of the value added tax (VAT) in a phased manner at the price of each gallon of fuel.
In the case of super gasoline, the proposal is to reduce VAT to 4.75%; for regular, it should be 5%, and for diesel, it should be reduced to 1.75%.
These reductions will be complemented by the suspension for three months of taxes on the Transportation Contribution (Cotrans) and the Stabilization Fund for Economic Development (FEFE), which already total $0.28 for each gallon of fuel.
“Recently, we temporarily removed two fuel taxes (FEFE and Cotrans), reducing $0.28 per gallon” — President Bukele posted on Twitter, and attached the table with the possible new reference prices.
“World inflation continues unstoppable, so I sent an initiative to remove most of the VAT on fuels and be able to keep prices low” — he added.
With the VAT suspension, the new prices could be $4.31 for super gasoline, $4.15 for regular and $4.14 for diesel, with the discount of the three taxes.
The Salvadoran president explained that the proposal will arrive this day at the Legislative Assembly, which will hold its ordinary plenary session and in which it could be approved, so that it enters into force at midnight this Tuesday, and is reflected in the prices of hydrocarbons at start tomorrow.
The Salvadoran government has had to take important measures to mitigate the impact of the world crisis due to the war, and one of them has been aimed at reducing the impact of the increase in fuel prices.