Friday, 16 February 2018

Gov’t can’t scrap special petroleum tax - energy experts

 Image result for Special Petroleum Tax

Adnan Adams Mohammed

Energy Expert, Ishmeal Agyekumhene has said that, government lacks the financial wherewithal to manage the country, and is thereby resorting to taxes and levies from the citizens in the country.

Reacting to issues regarding government’s proposal for a two percent reduction in the Special Petroleum Tax, Mr. Agyakumhene explained government lacks the finances to run the country, hence its desire to maintain  such taxes to generate revenue.

He said, it will be difficult for the government to scrap the special petroleum tax.

“What I know is that this country is broke and that is something they are not telling us. I am almost certain that if the 15% is so easy for them to remove, they would not have hesitated or gone to parliament only to ask for a 2% reduction,” he claimed.

The Finance Ministry on February 14, laid a Special Petroleum Tax Amendment Bill before Parliament seeking to reduce the Special Petroleum Tax from its current 15% to 13%.

This comes on the back of calls from some Ghanaians especially the Chamber of Petroleum Consumers (COPEC) and the Industrial and Commercial Workers Union (ICU) to register their displeasure with increasing prices on petroleum products.

Some energy sector players have also urged government to scrap the Special Petroleum Tax in order to lessen the burden on consumers of petroleum products.

They explain that, the government’s deliberate intention not to heed to calls to take back the ‘Special Petroleum Tax’ which was introduced somewhere in 2016 for the particular purpose of cushioning oil revenue due to unexpected sharp drop in crude oil prices on the world market at that time has become useless and a nuisance since the crude price has risen far above the low reached at the time the tax was introduced.. 

Dr. Charles Wereko Brobby, a former CEO of the VRA, impressed on government to scrap the Special Petroleum Tax in order to relieve consumers of the burden of escalating petroleum prices.

He maintains that consumers will continue to bear the brunt of the price hikes despite attempts to review the mode of calculating the tax.

Dr. Wereko Brobby’s comments follow the National Petroleum Authority (NPA)’s claims justifying the continuous imposition of the Special Petroleum Tax despite appeals to remove it.

He emphasized that, “What happened in 2016 was very simple, because crude oil prices had gone down, the then Minister of Finance, Seth Terkper introduced the special petroleum tax. At the time, many people complained against it including the current Deputy Minister of Energy in charge of Petroleum.”

Also, former Minister of Energy and Petroleum, Emmanuel Armah Kofi Buah, wants government to immediately scrap the Special Petroleum tax to bring relief to Ghanaians who buy fuel at the pumps.

According to the former Minister, the special tax has long outlived its usefulness and must be removed.

Mr. Buah contends that, the tax was introduced in 2015 to shore up the country’s revenue when the price of crude tumbled drastically on the world market. The Ellembelle MP wants the tax  scrapped to reduce fuel prices.

“If you buy a gallon of petrol, you are paying 2.39 pesewas in a special petroleum tax. You can do the Math; it is a huge burden on Ghanaians. The time has come for government to listen to the pain of Ghanaians and scrap the Special Petroleum tax and the reason I am calling for that is because its purpose has been achieved.”

The NPP government, then in opposition, criticized the former Mahama administration of imposing what it described as nuisance taxes on consumers.

The Special Petroleum Tax Bill was introduced by the immediate past National Democratic Congress (NDC) government in 2016 to shore up revenues generated from fuel prices when crude oil prices were low.

The new bill to reduce the tax was laid in parliament by a deputy Minister of Finance, Kwaku Kwarteng and referred to the Finance Committee of Parliament for consideration.

The Finance Committee is also expected to report back to plenary for general consideration and approval.

As soon as the new bill was laid, members of the Minority NDC said it was only a window dressing to address the high prices of petroleum products and that the tax ought to be completely scrapped for Ghanaians to have respite.

The Deputy Minister however told the press after laying the new bill that the NDC MPs introduced that tax when they were in government.

According to him, the initial tax was 17.5 percent when it was introduced but was later reduced to 15 percent by the NPP government.

He said that the new rate is fixed and that any further increase in fuel prices will not affect the rate to help cushion consumers.

But, in furtherance to his argument, Mr Agyekumhene said the Special Petroleum Tax has been factored into the 2018 budget as a major source of revenue generation, hence the difficulty on the part of government in having to scrap it off completely.

“The truth of the matter is that, [in] this country we don’t have money. Taking it off completely is going to have a very significant impact on government projected income in 2018,” he argued

In his estimation, government is financially handicapped, but is failing to communicate such to the general public.

“One of the things that I am not sure this administration is telling us is how dire our finances are. We have not been able to mobilize enough revenue in the first year to be able to say we are letting go of some of the things that were introduced for a specific purpose,” he said.


He has meanwhile accused government for using such means as petroleum taxes to generate revenue for the country.

“Petroleum taxes are a very lazy way of government getting money. They only compute how much fuel has been sold and slap the taxes on it” he said.

According to Agyekumhene, the numerous policies such as Free SHS implementation requires a lot of resources to run, and this has necessitated government’s excessive need for finances to keep up.

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