No more car propane subsidies

[NewsWhore]

As from February 2007 the government plans to stop subsidizing propane gas used by drivers as a cheaper alternative to gasoline. The government has contracted a company to come up with a plan that would allow the subsidy on domestic usage of lower-costing propane to continue, according to a report in Diario Libre. The proposed removal of the vehicular propane gas subsidy is, according to the newspaper, a way to free up funds for debt payments in 2007. Montas says that with the possible fiscal reform the government looks to free up RD$16 billion, and will include serious reduction in spending. The government spends RD$5 billion on propane gas subsidies, and an estimated 50% goes towards fuel for cars. Regular gasoline consumption fell by 18 million gallons between 2004 and 2005. According to several different newspapers, the more concentrated focus of the LPG subsidy in 2007 is expected to increase government revenue by RD$1.5 billion or 1% of total tax income.
Not all reports were as rosy, and in today's Hoy, economist Hector Guiliani Cury said that the projected focusing of the LPG subsidy would just increase corruption at the local level. He said that there was no way that a gas tank filled at the local LPG distributor could not be taken home and then installed in a vehicle. Guiliani suggested that the focus needed to be sharpened through the use of special ID cards that would identify the poorest as eligible for the subsidized gas.

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