Reduce ‘nuisance’ taxes causing fuel prices hikes – COPEC

The Chamber of Petroleum Consumers (COPEC) Ghana is calling for the immediately “scaling down” on some of the taxes “choking” the current price build-ups in petroleum products.

According to a research analyst with the Institute of Energy Security, Richmond Rockson, barring any intervention by government, prices of petroleum products will go up in February.

His caution came after COPEC earlier warned of rising prices at the pumps at the beginning of the year. Prices of petroleum products have cumulatively risen to about 6% since the beginning of the year.

In statement Friday calling for the scrapping of the taxes, COPEC said: “What is even troubling is that close to fifty per cent of the total cost of fuel in Ghana at the pumps is nothing but one tax or the other with the Special Petroleum Tax alone pegged at 15% on ex depot price position which currently translates into 0.53 pesewas per litre thereby meaning Ghanaians pay on each gallon of 4.5litres; a tax burden of 2 cedis and 39 pesewas (GHS 2.39p).

“Copec-Ghana considers the Special Petroleum Tax (SPT) as not only nuisance but avoidable in the face of rising prices on the world market as this tax was introduced in 2015 to shore up some revenue at the time when international market prices had dipped below $30/barrel. One wonders why this particular tax has not been scrapped altogether since world market prices started picking from late 2016; we find this particular tax very unsustainable at current levels of above $60/barrel.”

Below is the full statement

PETROLEUM PRICE INCREASES ACROSS GHANA, PREMIX AND ENERGY BONDS; CALLS FOR REVIEW.

ADDRESS BY MR SOLOMON KOTEI, VICE CHAIR OF THE COUNCIL OF COPEC AND ALSO THE GENERAL SECRETARY OF INDUSTRIAL AND COMMERCIAL WORKERS UNION ON FRIDAY, JANUARY 26, 2018

Ladies and Gentlemen of the press and all other stakeholders here gathered, the Chamber of Petroleum Consumers, Ghana (COPEC-GH) , has invited you here today on a very critical issue that affects workers of Ghana and the ordinary Ghanaian in general-Hikes in petroleum prices, general associated hardships and the need to scale down on some of the taxes choking the current price build up.

Government after government has played politics with the pricing of petroleum products over the years with all sorts of promises to reduce the pump prices before ascending power but woefully fail because taxing petroleum has become the cheapest means of generating revenue for the country and its development. But ladies and gentlemen, what is development when the people it is meant for are squeezed and made to live under harsh economic conditions and pay cutthroat prices for petroleum products?

SCRAPPING OF SPECIAL PETROLEUM TAX

What is even troubling is that close to fifty per cent of the total cost of fuel in Ghana at the pumps is nothing but one tax or the other with the Special Petroleum Tax alone pegged at 15% on ex depot price position which currently translates into 0.53 pesewas per litre thereby meaning Ghanaians pay on each gallon of 4.5litres ; a tax burden of 2 cedis and 39 pesewas (GHS 2.39p).

Copec-Ghana considers the Special Petroleum Tax (SPT) as not only nuisance but avoidable in the face of rising prices on the world market as this tax was introduced in 2015 to shore up some revenue at the time when international market prices had dipped below $30/barrel. One wonders why this particular tax has not been scrapped altogether since world market prices started picking from late 2016, we find this particular tax very unsustainable at current levels of above $60/barrel.

The reduction by the current government of the SPT from 17.5% to 15% as was contained in the 2017 budget was simply mathematical as in reality the actual value has rather shot up over the past due to rising prices on the international market without any attempts to scale down further. We call for the immediate removal of this particular tax and others as contained in our earlier petition to the president in order to reduce the unnecessary pressures on our pockets and to also help stabilise the pockets and incomes of Ghanaian workers and the generality.

The SPT must be scrapped and government must no longer hesitate to do what is fair and just for the ultimate good of Ghanaians.

We are also mindful of several other avoidable taxes on the price build up and once again reiterate our call for a further downward review of some of the tax elements contained in the petroleum pricing build up as we believe government equally makes some serious gains or incomes with the surge in world market prices since Ghana is also a crude producing country that enjoys all the positives with any increases on the international market.

From the foregoing, Copec believes a gallon of petrol and diesel at the pump should not be sold beyond 18 cedis instead of the current unbearable rate of above Ghc20/gallon.

The net effect of these rampant pump prices’ increases is a corresponding increase in prices of foodstuff, goods and services, import duties and inflation generally as basic necessities of life shoot up in the face of rather stagnant meagre incomes and salaries of the Ghanaian worker.

Government as a matter of urgency will need to give Ghanaians some relief by reviewing the numerous taxes in the petroleum pricing build up to bring about some stability and reductions to ease the pressures on our pockets.

We encourage the Government to rather introduce new and ingenious ways of expanding the tax bracket to attract more revenue than the over-concentration on petroleum taxation, the government must proactively explore other revenue generating sources for national development as the over-dependence on Petroleum taxation affects every aspect of our lives and that of the economy generally because of its chain effects-Not even the size and price of Kenkey is spared.

Ladies and Gentlemen of the press, the current situation if not urgently addressed by government will certainly leave Ghanaians with having to cough up even more cash to be able to go by their daily activities in the face of harsh conditions of living to pay for further increases in petroleum products in February.