Scrap taxes on fuel to reduce prices – Energy Institute
Following the unannounced surge in fuel prices in Ghana, the Institute of Energy Security (IES), has called on government review taxes and other levies on petroleum products to make them a bit cheaper for Ghanaians.
Currently, data from the National Petroleum Authority shows that there are about 10 different kinds of taxes and levies on petroleum products.
Speaking on the Citi Breakfast show, a principal research analyst at IES, Richmond Rockson, argued that the adverse effect of the increment in fuel prices on consumers could be minimal if government scraps some of the taxes.
“The first thing that should go is the special petroleum tax. I don’t think that there is any need for government to impose 15 percent there. There is no point in that. Some of them can also be reviewed; I don’t see why the road fund should be 40 pesewas, it’s too much. The price stabilization and recovery levy must also go, especially when government is passing the cost on to consumers. There is no point keeping that in there as well,” he added.
Current figures from some fuel stations show that, prices of petrol and diesel have hit an all-year high, with petrol selling at an average of GHc4.29 at the pumps, and diesel going for an average of GHc4.23 per litre.
Mr. Rockson attributed the increment on the surge in crude prices on the international market as well as the depreciation of the Ghanaian currency – the cedi.
“When it comes to fuel pricing we know that there are a number of indicators that we all look at – one of the critical things that we look out for is our cedi, thus the exchange rate as compared to the dollar. Over the period, the cedi has been depreciating marginally and from May till date – ten consecutive windows—it’s only one [window] that we had a stable currency. In all the other nine, the cedi depreciated and we’ve been mentioning this every time.
As we speak, the average exchange rate is 4.48 pesewes from a previous average of 4.44 pesewes, and this is really troubling because the effect it has on fuel pricing is that, it’s going to push prices up instead of pushing it down.”
He said “crude oil prices have also surged” adding that “as we speak, we are doing about 55 dollars from a previous average of 52 dollars per barrel, a depreciation of about 3%.”
“For a benchmark for finished products for gasoline and gas oil, they’ve also gone up, in this particular window they went up by 14% for gasoline and for gas oil it went up by 8%. This is what has accounted for the increment in this month [September],” Mr. Rockson explained.