High fuel prices affect government expenditure, scrap some taxes - COPEC insists

Fuel to go up by 3%

LPG to reduce by 2%

Fuel prices also affect government

The Chamber of Petroleum Consumers (COPEC) has said it is prudent for government to scrap some taxes on petroleum products even though President Nana Addo Dankwa Akufo-Addo stated otherwise.

President Nana Addo

Read full articleDankwa Akufo-Addo speaking at the 2022 May Day Celebration in Accra said, “Removing taxes on petroleum products will reduce Government revenues by some four billion cedis (GH¢4 billion). At this time, when we are determined to expand Government revenues in order to increase our capacity to finance our own development, can we afford to reduce tax revenues by four billion cedis (GH¢4 billion)?”

However, Executive Secretary for COPEC, Duncan Amoah, has said government will be impacted negatively if taxes on fuel are not scrapped.

In an interview on Citinews, he said, "The response that the President gave is one that needs further scrutiny and assessment. It cannot be the case that fuel prices will only affect the people. Fuel prices also affect the government and the state itself. Any time petrol prices go up, the state will spend more than accounting year because the state does not run an OMC and is also buying from the same market that the people buy from.”

“So when petrol prices increase, the security agencies that the government will need to provide fuel for, the government machinery, ministries, departments, agencies across the country, their expenditure line will shoot up. So the bottom line is government in itself will suffer collateral consequence at the end of the accounting year,” he explained.

Meanwhile here are some taxes that are imposed on fuel prices.

Energy Fund levy (1p)

Sanitation and pollution levy (10p)

Price stabilization and recovery levy (16p)

Energy sector levy (20p)

Special petroleum levy(46p), Road fund levy (48p)

Energy debt recovery levy (59p)

Analysts have argued that these taxes are regressive and unduly burden the poor.

COPEC, in its call, wants taxes like the PSRL, Special Petroleum Tax, Primary Distribution Margin, Energy Debt Recovery Levy, and the BOST Margin be reviewed.

It has also been projected that fuel prices may go up in the current pricing window by 3% whiles LPG may experience a reduction of 2%.

Watch the latest episode of BizTech below;