17.5% VAT on fuel unwarranted - IEA Fellow

A senior research fellow of the Institute of Economic Affairs (IEA), Dr John Kwakye has said a recently imposed 17.5% Value Added Tax (VAT) on selected petroleum products is unwarranted.

“Petroleum products are already overtaxed,” Dr Kwakye said at a press conference organised by the Institute on the 2015 budget recently presented to Parliament by Finance Minister Seth Terkper.

In his view, “imposing a new tax is unwarranted, considering the expected knock-on effects on the economy.”

The special petroleum tax bill was passed into law by a one-sided parliament last week Wednesday after the Minority boycotted the bill which was considered under a certificate of urgency.

Under the new arrangement, premium (petrol) will see a rise of 3.04% and kerosene 2.85%. The price of Premix will remain the same.

The new tax is expected to rake in GHc1.541 billion between November, 2014 and December, 2015.

Dr Kwakye, however, said imposing taxes on petroleum products at a time that the price of crude had fallen to a four-year low on the international market was imprudent.