Monday, 12 February 2018

Scrap ‘special petroleum tax’ now – Ghanaians fume at gov’t

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Adnan Adams Mohammed

Sections of the Ghanaian publics have registered dismay at government’s imposition of a ‘Special Petroleum Tax’ on the citizenry.

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 a 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 substantially. 

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 continued imposition of the Special Petroleum Tax despite appeals to remove it.

He emphasized that, “What happened in 2015 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 said the tax must be scrapped to reduce fuel prices.

“If you buy a gallon of petrol, you are paying 2.39 pesewas as 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.

In an attempt to reverse the trend, the NPP administration reduced the Special Petroleum Tax rate by 2.5 percent.

Thus the tax dropped from 17.5% to 15%.

But this has not gone down well with industry watchers who believe the removal of the tax will bring great relief to consumers.

Dr. Wereko Brobby further explained that, removing the tax will be prudent in regulating operations in the sector; “The NPP itself condemned the policy…the idea of reduction is not tenable; what was put in to cream off reductions that were properly due to the people should be given back and now it is getting even worse because as prices go up, the percentages are going up and it is just giving a worse effect. So none of the suggestions are tenable I should say,” he added.

Some commercial drivers and consumers of petroleum products, the Chamber of Petroleum Consumers (COPEC), and the Industrial and Commercial Workers Union (ICU), last week Wednesday, February 7, 2018 embarked on a demonstration to demand the removal of the SPT and the petroleum price stabilization levy.

The exercise culminated in the presenting of a petition to the Ministries of Energy and Finance

The COPEC and ICU protest was against the price increase of petroleum products.

Currently, a litre of both petrol and diesel goes for GHc4.62 at some major fuel stations.

This is despite assurances from the NPA that prices will remain fairly stable at the pumps.

The NPP government while in opposition, also promised to scrap some taxes on petroleum taxes it described as “nuisance” taxes.

There has thus been pressure on the NPP government to honour its promises after it reviewed downwards only a few of the taxes instead of scrapping them all completely.

But, the Chief Executive Officer of the National Petroleum Authority (NPA), Hassan Tampuli, has however indicated that, government cannot scrap or review taxes on petroleum products downward any further.

According to him, the taxes have been incorporated into government’s revenue projections for the year and any attempt to scrap any of them could spell doom for the current revenue structure.

Speaking to the media last week, Mr. Tampuli said government is putting in place measures to alleviate the plight of petroleum consumers.

“You would agree with me that, government has some obligations, and these obligations are based on the projected revenue and the revenues that we have accrued. These revenues include the price stabilization and recovery levy. Now that lots of revenue for the government.”

“If you are saying that we should remove completely the Special Petroleum Tax, price stabilization levy among others, then you are just asking for the collapse of the revenue as far as government projections are concerned. What government is doing is in a way responding to the needs and concerns of the Ghanaian people by reducing the price figure by 3%,” he added.


He further stated that, the NPA interventions have rather prevented the fuel prices from rising much higher than what is seen at the pumps.

According to a statement issued by the Authority, “these interventions have seen prices rise by just between 0.66 percent and 1.08 percent.

The statement was in reaction to commercial drivers’ grievance on the rampant increase in petroleum prices and their intention to demonstrate against the government.

It explained that the prices of petroleum products have risen by about 18 percent on the international market since November 2017.

“Under the current price deregulation regime which has been in effect since July 2015, price volatility on the international market is expected to directly impact domestic pump prices because the government has no direct control over the setting of the bi-weekly prices of petroleum products,” it said.

The Authority said it “has since December 2017 used upfront, the expected receipts from the Price Stabilization and Recovery Levy (PSRL) in the price build-up as a mechanism to bring stability to prices.”

The NPA has therefore described the demonstration by some commercial drivers in protest of price increases in petroleum products, as being in bad faith.

It added that the group was misleading to the public.

NPA also advised stakeholders to seek clarity from them to “ensure that the public is not misled by those who are motivated by reasons other than those of national interest.”

It said it was of the “considered view that the reasons for the intended demonstration are anything but noble” given the interventions it has been making.

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