Minister of Energy and Green Transition, John Abdulai Jinapor
Following the introduction of the Energy Sector Levy, which requires consumers of petroleum products – petrol and diesel – to pay GH¢1 per liter of fuel purchased, many have expressed concerns.
Opponents of this tax measure have raised critical questions, including whether Ghanaians will eventually stop paying the fuel levy or if it has been instituted as a permanent charge.
Several experts, including legal practitioners, have urged the government to introduce a sunset clause to ensure clarity and transparency regarding the levy’s duration.
They argue that a GH¢0.95 levy is already imposed on petrol and GH¢0.93 on diesel, both of which have now been increased to GH¢1.
What is a sunset clause?
A sunset clause is a provision in a contract, law, or other legal document that sets a specific date for the agreement or law to automatically expire.
It also outlines the conditions for termination unless renewed or extended by legislative action.
Experts advocating for a sunset clause are keen to determine the period during which the tax measure would remain in effect or when it would be re-evaluated.
The sunset clause is expected to factor in the ex-pump price, the impact of cedi appreciation on petroleum pricing, and sustainability considerations within the energy sector.
Example of a sunset clause for the GH¢1 Fuel Levy
The GH¢1 fuel levy could be imposed for two years, effective from its implementation date. After one year, the government would conduct a review to evaluate the levy’s impact on the economy, fuel prices, and the energy sector.
If the levy is not renewed or amended after the two-year period, it would automatically expire, causing fuel prices to return to their pre-levy state.
This clause offers flexibility, allowing the government to reassess the levy’s effectiveness and either adjust, renew, or terminate it if necessary.
The review and evaluation process enhances accountability, ensuring regular assessments of the levy’s impact and informed decisions about its continuation.
By incorporating a sunset clause, the government could implement the GH¢1 fuel levy as a temporary measure to address the energy sector debt, while maintaining a clear framework for review, evaluation, and potential expiration or modification.
Watch the latest edition of BizTech below:
Click here to follow the GhanaWeb Business WhatsApp channel
Meanwhile, watch GhanaWeb’s tour of Odweanoma Paragliding Field below: