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IES slams ‘insignificant’ 2% Special Petroleum Tax reduction

February 16, 2018 6:00 AM
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IES slams ‘insignificant’ 2% Special Petroleum Tax reduction

A senior Analyst at the Institute of Energy Security (IES), Richard Rockson, is dissatisfied with the marginal reduction in the Special Petroleum Tax from 15 percent to 13 percent.

Like some observers, Mr. Rockson insists that the Special Petroleum Tax should be scrapped completely.

Mr. Rockson stated that even after the reductions, Ghanaians will continue to suffer in terms of how much they pay for fuel.

“Fortunately, we have had some reduction over the period but it is woefully insignificant. What is 2 percent going to do to the ordinary consumer when prices are currently at GH¢4.57?The excuse that government will lose revenue is untenable because the ordinary Ghanaian cannot continue to suffer in the name of revenue.”

He argued that the tax was needless because, among other things, government’s crude oil price benchmark at the time it was introduced was $57.5 per barrel but it has since exceeded this benchmark with $60 so “the special petroleum tax does not have a place today in the current system because we don’t have the same problem we had a few years ago.”

Parliament, on Thursday, passed the Special Petroleum Tax Amendment Bill to reduce the levy on petroleum products by two percent.

This was after recent protests against the rising cost of fuel, as well as calls from the Minority NDC MPs, whose government introduced the tax in 2014, for it to be scrapped.

The Industrial and Commercial Workers Union (ICU) was more receptive towards the reduction.

Also speaking on Eyewitness News, the ICU’s General Secretary, Solomon Kotei, remarked that “any relief that comes by way of price drops, industry obviously gets some relief in terms of what they also use the fuel for.”

Although his union had called for the scrapping of the tax, Mr. Kotei said he was satisfied because the government was on the right trajectory.

“We were praying and pushing for a total scrap. But if we didn’t get the scrap and this is the second time running government is reducing the same special petroleum tax by and additional 2 percent, we think gradually, that element will go out of the price programme and all Ghanaians will get that feel at the appropriate time… It goes to prove that our agitation and commentary on the issues is right.”

The Special Petroleum Tax Law was passed in 2014 as part of tax measures adopted by the government at the time to increase revenue generation and improve efficiency on revenue collection from petroleum products.

The Tax was initially set at 17.5%, but was reviewed downwards by 2.5 percent in the 2017 budget.

The law authorises the Ghana Revenue Authority to collect the tax, which would be paid into the Consolidated Fund.

The petroleum products to be affected, according to the Finance Ministry include petrol, diesel, liquefied petroleum gas, natural gas and kerosene.


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