Review petroleum taxes – COPEC urges government

The chamber of Petroleum Consumers (COPEC) Ghana has challenged the government to, as a matter of urgency, 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 pressure on them.

Mr Solomon Kotei, General Secretary of Industrial and Commercial Workers Union, briefing the press last Friday, encouraged the government to rather introduce new and ingenious ways of expanding the tax bracket to attract more revenue than the over-concentration on the 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,” he stated.

Mr Kotei added that the current situation, if not urgently addressed by the government, will 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.

Scrapping of SPT

According to the General Secretary, what is even troubling is that close to 50% of the total cost of fuel in Ghana at the pumps is nothing but one tax or another with the Special Petroleum Tax (SPT) alone pegged at 15% on ex-depot price position which currently translates into 0.53p per litre, thereby meaning Ghanaians pay on each gallon of 4.5 litres a tax burden of ¢2.39p.

He pointed out that COPEC-Ghana considers the Special Petroleum Tax (SPT) as not only a 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.

He further stated that 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 them down further.

He said, “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 [of the public] .”

“The SPT must be scrapped and the 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 the 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,” he added.

The group believes a gallon of petrol and diesel at the pump should not be sold beyond ¢18.00 compared with the current unbearable rate of above GH¢20/gallon.

COPEC advised the government to work proactively with all stakeholders as partners and collaborate with them in finding lasting solutions to the precarious petroleum issues such that the interest of the average Ghanaian consumer is protected and safeguarded at all times.

Cedi depreciation

The group also stated that another worrying development that is compounding frequent increases in petroleum products is the depreciation of the cedi.

According to them, anytime the cedi loses value to the dollar and other international currencies amidst rising and unstable global oil prices, the ex-refinery prices of petroleum products increase.

They said, “Fuel, which was sold at the pumps for GH¢3.630/litre or GH¢ 16.30/gallon in December 2016 is now being sold for GH¢ 4.630/litre or GH¢20.85/gallon, representing 27.9% or 28% net increases over the past one year. One cannot discount how the depreciation of the cedi has largely affected these increases.