People celebrating the Assumption of Mary on Aug. 15, 2018 in Petit Goave, Haiti/ photo credit, Garry Pierre-Pierre
By By Dr. Bobb Rousseau and Dr. Bingue Jacques
Haiti is poor and might be forever poor if it continues to subsidize more than $ 250M per year of energy products for all Haitians. The problem does not lie in the fact that the Haitian government subsidizes all public services in Haiti, but in the fact that it subsidizes equally the poor and the rich, the individuals and the businesses, the millionaires and the unfortunates.
All citizens, regardless of their economic level, pay the same price for a gallon of gasoline, a kilowatt-hour of electricity, a bus ride, a study at the University of the State of Haiti, and other services. These services are subsidized to the detriment of other services that could help the country exit poverty such as education, health, agriculture, and other crucial ones.
One of the most egregious subsidies is the one for petroleum products especially gasoline and diesel, which, outside of the electricity industry, receives the most government subsidies. The petroleum subsidy is a sum of money paid by the government to distributors or resellers of petroleum so that the price of a gallon can remain low at the pump.
The price that is displayed at the pump is the price that each citizen contributes toward a gallon of gasoline, but it is not the price that the owner receives for that gallon. Indeed, the government subsidies a good part of the price of a gallon for the citizen in the form of an oil subsidy so that public transportation remains affordable for all.
However, public transit does not benefit from all these subsidies since the wealthy also benefits from it when they buy gasoline for their private cars and/or to operate their businesses. In other countries of the world, especially countries with a capitalist or a neoliberalism system, the subsidy is for the benefit of the poorest. Nevertheless, in Haiti, it is for the benefit of all, mostly the rich.
The subsidy reduces the State’s ability to provide basic public services to the nation. It is wasted money for it enriches the pockets of the rich who sell their services to the State such as NOVUM, DINEPPA, HAYTRAC, E-POWER, and SOGENER amongst others. As it is now, every gallon of gasoline sold in Haiti is food taken out of the mouth of the poor or allowing someone to die because of poor access to care, lack of hospitals and unqualified doctors. This factor is proof that Haiti is poorly managed and needs the expertise of the Diaspora. The Government of Haiti fails to understand that the country is under no obligation to subsidize gasoline for the rich; rather, it is under the obligation to subsidize it to provide affordable transportation for the poor as stated throughout the constitution of 1987. Each year, as the government loses millions in subsidies, the needs of the people increase exponentially and the country is unable to provide its people basic goods and necessities. According to the World Bank, Haiti lost more than $160 million in petroleum subsidies in 2017.
So that the State can respect and guarantee the fundamental rights of the citizens listed in the preamble to the constitution and reinforced by articles 66 to 88 relating to decentralization by devolution, Haiti must withdraw itself directly from the business of subsidies or distribution of public services. The country needs to rethink its public transportation system, which slashes millions of the national budget, but has unlimited potential to increase the coffers of the public treasury.
Group Citadel and AHEAD recommend an efficient and affordable public transportation system where the poorest would receive a transportation subsidy depending on their income. This system would be regional, thus decentralized, and operated by the territorial collectivities or in the form of private-public partnerships between groups of citizens and local governments. The latter would develop strategies to be able to buy large vehicles that can comfortably carry more people to reduce the cost.
These larger vehicles would consume less gas, thus emitting less pollution. Local entrepreneurs and governments would collaborate with the Diaspora to purchase, operate, and maintain those vehicles. These factors would help reduce the cost of transportation so that most of the population can afford the cost without subsidies. For the very poor who cannot afford transportation but really needs it, the individual would go to their office of the Directorate General of Taxes to make the final declaration of their income, which will determine their eligibility to receive subsidies; said subsidies would be awarded fairly and equitably.
In terms of the price of gasoline, the drivers would pay the actual price per gallon without the subsidy from the central government. When the global price of oil is low, the State and local governments would impose a tax on the sale of the gallon.
The collected taxes, added with the subsidies, which will no longer be granted to citizens, would enlarge the public treasury so that the State can pay down its debts and better serve the interests of the constituents. Providing affordable public services does not mean that the government must subsidize the rich to the point that it becomes so poor that it can no longer provide crucial basic public services to the nation.
Dr. Bobb Rousseau is an entrepreneur who has developed several businesses in Haiti.
Dr. Bingue Jacques is the founder of Innovative Energy Solutions, a company that creates cutting edge waste- to-energy technologies.