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Fuel price hike: 3 taxes under review to cushion consumers

Fuel Pump1 2020 File photo of a fuel pump

Thu, 17 Mar 2022 Source: aviationghana.com

The Ministry of Finance is considering the review of three different taxes on fuel in a bid to cushion consumers from the expected impact of recent increases in fuel prices.

The special petroleum tax, energy sector recovery levy, and sanitation and pollution tax in the price build-up of fuel are now under review.

The price of petrol, which was selling for about GH¢ 8.22 per liter 48huours ago, is now selling for as high as GH¢9.70 per liter. The price of diesel has also now crossed the GH¢10 per liter mark.

Increases at the pumps locally are driven by a surge in the price of the commodity on the international market following the Ukraine-Russian conflict that has led to a dip in supply and a local currency that is performing poorly against major trading currencies.

Trading at under GH¢6 to US$1 at the turn of the year, Ghana’s local currency, the Cedi, now trades for about GHC 8 to US$1.

Inadequate inflow has so far constrained central government from acting over the past two weeks to cushion consumers in the deregulated petroleum market.

Now forced to act because of the ramification of the potential increase in transport cost on already high food prices, the Finance Ministry is considering a reduction in three taxes in the price build-up of fuel namely: the special petroleum tax, energy sector recovery levy, and sanitation and pollution tax.

Ghana’s food inflation has re-gained its dominance over non-food–17.4% versus 14.5% respectively.

Andrew Egyapa Mercer, Deputy Energy Minister confirms that the representations made to his ministry by the National Petroleum Authority (NPA) for a review of the three taxes to cushion the impact of surging fuel prices on consumers have been endorsed and forwarded to the Finance Ministry for assessment.

He indicated that, given the country’s precarious financial position, the Finance Ministry is working on some modeling to see the extent to which they can accommodate any proposed reduction in the three fuel taxes recommended for downward review.

As the conflict between sanctions-hit Russian and neighbouring Ukraine continues, further increase in the price of fuel locally is expected, unless Saudi Arabia and the United Arab Emirates boost production to rein in soaring prices. That, however, remains a remote possibility.

Source: aviationghana.com
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