Business News of 2014-03-06

Implementation of petroleum tax in limbo

Government appears to be having some challenges in implementing the ad-valerom tax on petroleum products.

According to the Ghana Revenue Authority (GRA) the National Petroleum Authority (NPA) should have introduced the tax from January 8, 2014 but has not done so. After four reviews in prices of petroleum products for this year, the NPA is yet to introduce the tax.

Sources say government is currently at a fix about the appropriate time to introduce that tax, because of the current economic difficulties in the country. The sources say government fears Ghanaians may not support any huge increases in prices of petroleum products.

Implementation of the ad-valerom would have seen prices petroleum products during the recent adjustments go up by almost 12 or 15 per cent instead of the little over six percent hike recorded.

The tax is expected to gross a little over GH¢200 million for the state. Analysts say considering the current challenges that government is facing it might be prudent to go ahead with the implementation of the tax to boost revenue generation.

Government last year secured parliamentary approval to change some of the taxes on petroleum products. This resulted in the introduction of the Ad-Valerom tax which would see almost 1 to 6 per cent of tax put on all petroleum products.

But communication consultant for the Energy Ministry, Edward Bawa, says government is not hesitant in implementing the tax, rather it wants to carry out the necessary education before introducing the 1 to 6 per cent petroleum tax.