New taxes on petroleum products don't make sense - Wereko-Brobby charges at government

Dr. Charles Wereko-Brobby has said that there is no justification for the government’s proposal of new taxes on petroleum products, stressing that this is indication that the sector is has become an easy avenue for the government to rake in money.

The former Chief Executive Officer of the Volta River Authority (VRA) added that it has become a practice, dating back to the era of former president, John Agyekum Kufuor, for several taxes to be slapped on the petroleum sector, leading to high cost of fuel and its related products.

He made this known on Citi FM’s Eyewitness News, saying that in the end, consumers are left to continually bear the cost of these highly unjustifiable taxes.

“It is totally unjustified… There is no justification, it [petroleum products] just happens to be a low-hanging fruit that you can just slap anything on,” he said, reports citinewsroom.com.

Further, he suggested that some of these special taxes that have introduced for specific purposes be scrapped to offer petroleum customers some relief rather than the introduction of new taxes.

“20 years ago, President Kufuor introduced what he called the Refinery Recovery levy. That was supposed to last for four years but 20 years on, it is still here, now as the energy sector recovery levy. In 2015, oil prices collapsed and Mahama government instead of reducing prices according to the formula said our revenues are down because the datum prices of oil have gone down, so we need to crawl back revenue, so there was a 2-year special petroleum levy. I think 8 years on, it is still on. I will suggest that if these two temporary taxes which were meant to address specific issues were removed, that alone will reduce taxes,” he said.

As part of his reading of the 2021 budget in Parliament last week, the caretaker Minister of Finance, Osei Kyei Mensah-Bonsu, announced the tax proposals on fuel; 10 pesewas per litre for diesel and petrol as Sanitation and Pollution Levy (SPL), and 20 pesewas per litre of petrol and diesel to be used as Energy Sector Recovery Levy to cover charges on the State for excess capacity of power.

“To provide the requisite resources to address these challenges and fund these activities, Government is proposing a Sanitation and Pollution Levy (SPL) of 10 pesewas on the price per litre of petrol/diesel under the Energy Sector Levies Act (ESLA),” the minister said.

He added that, “Mr. Speaker, it has become very necessary for Government to consider a review of the energy sector levies. The Energy Sector Recovery Levy of 20 pesewas per litre on petrol/diesel under the ESLA is hereby submitted to this House for approval,” he added.

Many Ghanaians thereafter complained that should the proposed taxes be approved, they will bring untold hardship on them especially as they are yet to recover from the effects of the coronavirus on their personal economies.

Already, in the last two months, prices of fuel have risen by some 11% and the newly proposed taxes could add an additional 5% rise in taxes.

“The idea that sanitation taxes should be put on petroleum doesn’t make sense. I think government has been dishonest with the people of Ghana and not just see petroleum as the big cow for ripping off people,” Dr. Charles Wereko-Brobby said.

He advised the government to avoid proposing such new taxes as it could lead to other aspects of the economy also being affected negatively.