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Monday, July 4, 2022

‘Removing Taxes On Petroleum Products Not Best’

Dr Anthony Yaw Baah

PRESIDENT NANA Addo Dankwa Akufo-Addo has stated that it will be very difficult for government to remove taxes on petroleum products especially in these challenging times.

According to him, Ghana’s current economic condition will not allow for tax reduction.

He said government is currently confronted by very tight financing conditions, in the wake of inadequate domestic revenue mobilisation and therefore removing taxes on petroleum products will reduce government revenues by some GH¢4 billion.

He said the government is rather determined to expand the country’s revenue base in order to be able to finance the country’s development thereby cannot afford to reduce tax revenues by GH¢4 billion.

This follows the Trades Union Congress (TUC)’s demands from government to reduce taxes on petroleum product due to the rising cost of living in Ghana because of the high fuel prices.

Secretary-General of the TUC, Dr. Anthony Yaw Baah, in a letter to the Finance Ministry on Monday, March 21, 2022, said “The situation must be addressed without further delay, otherwise many more Ghanaians will be pushed into destitution.”

Dr. Baah noted in the letter how fuel prices have increased astronomically since January, obviously impacting on the cost of living.

“We propose that Government must immediately suspend all taxes and levies on petrol, diesel, LPG, and kerosene…This should bring down prices of these fuel products by an average of about 15 percent…The suspension should remain in force until the international price of crude oil stabilises and the decline of the cedi has been halted,” he suggested.

However, speaking at this year’s May Day celebration on Sunday May 1, 2022, President Akufo-Addo mentioned that “Indeed, some of the revenues from these same taxes on petroleum products is what is used to pay some of the salaries of some of the seven hundred thousand (700,000) public sector workers on Government’s payroll. We are addressing the issue of fuel price increases by implementing measures that are succeeding in stabilising the exchange rate, a key determinant of fuel prices. Government is also working hard to ensure reliable supply and availability of petroleum products, thereby preventing shortages, a phenomenon which is being experienced in some other neighbouring countries. By the same token, we are keeping the lights on in Ghana.

“We should bear in mind that, even though we are a modest producer of crude oil, with a current output of one hundred and forty-eight thousand (148,000) barrels per day, we are still a net importer of petroleum products. We, therefore, continue to be vulnerable to the price volatilities of the world market for petroleum products.

“Nonetheless, intense efforts are being made to rehabilitate the Tema Oil Refinery, to enable it contribute to stabilising petroleum prices, which should see the light of day very soon. We are also encouraging private companies to establish refineries in the country, one of which is eighty percent (80%) complete, and is expected to be commissioned before the end of this year.

“Secretary General, as we work to address these issues, we cannot take adhoc measures that will only give temporary reprieve, and only aggravate the situation even more in the medium to long-term. As much as possible, let us use existing institutions and sustainable measures to address these concerns,” he advised.

 

 

BY Vincent Kubi

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