Scrap some taxes on petroleum products and reduce others to lessen the cost of living – Baskin Africa to government

Baskin Africa, is calling on the government to scrap some taxes and levies on petroleum products as well as reducing others.



This, the Policy think-tank believes will reduce the prices of fuel and thereby lessen the cost of living for consumers.

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In a press statement released today Tuesday February 8, 2021 and signed by its Executive Secretary, Issifu Seidu Kudus Gbeadese, Baskin Africa says per an ex-pump price build up chart released by the National Petroleum Authority on February 1, 2022, taxes, levies and margins alone are about 14 in the price up which forms about 32 to 35 percent of the product pricing.

“So, a reduction in the threshold and scrapping of some of them will free some space for price stability and a possible reduction in the final price the consumer is expected to pay” part of the statement reads, while adding that

“Since the final cost is passed on to the consumer, a reduction will have a positive downward effect on consumers, thereby reducing the cost of goods and services and ultimately, the cost of living.”

 

In effect, Baskin Africa has made the following suggestions for the government’s consideration:

 

  1. A reduction in the Price Stabilization and Recovery Levy by 50%, so that the remaining 50% can still make the revenue for the premix fuel subsidy.

 

  1. Government must scrap the Energy Debt Recovery Levy

 

  1. The government should also scrap the Sanitation and Pollution Levy and rather impose it as a direct discriminatory tax on giant companies that engage in the pollution.

 

  1. Scrap the Special Petroleum Tax since it has outlived its usefulness.

 

  1. Reduce the Energy Sector Recovery Levy by 50%.”

 

Read the full statement below:

 

Press Release

 

For Immediate

08/02/2022

 

GOVERNMENT MUST SCRAP AND REDUCE SOME TAXES AND LEVIES ON PETROLEUM PRODUCTS TO CUSHION THE SUFFERING MASSES.

 

The Government of Ghana started the implementation of the price deregulation of petroleum products in June 2015, to allow for the ex-pump prices to reflect industry cost, and to also engineer competition of the Oil Marketing Companies (OMCs) in the importation, financing and control of retail pricing. In view of this, the government weaned the OMCs from the Petroleum Price Control by the National Petroleum Authority (NPA).

 

It is worthy of note that the price build of petroleum products is affected by key indicators, including:

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  1. Price of crude oil in the World Market
  2. Cost of importation
  3. Exchange rate (ie Cedi-dollar relationship)
  4. Taxes, levies and margins, among others.




Pursuant to the above, and with reference to the price deregulation policy, the government does not have control over some of the factors, like the prices of crude oil in the world market. However, it has total control over the taxes, levies and margins so, to cushion the suffering masses, the government only need to either scrap some these taxes and levies or reduce their threshold and scope.

 

The ex-pump price build up chart released by the NPA on the 1st of February, 2022 indicated that, taxes, levies and margins alone are about 14 in the price build up, and this constitute about 32 to 35 percent of the price build up. So, a reduction in the threshold and scrapping of some of them will free some space for price stability and a possible reduction in the final price the consumer is expected to pay. Since the final cost is passed on to the consumer, a reduction will have a positive downward effect on consumers, thereby reducing the cost of goods and services and ultimately, the cost of living.

 

In the 2022 budget, the government set the benchmark price of crude oil at $52 per barrel. As of 7th February, 2022, Brent Crude Oil is selling at $92.85 per a barrel. This implies that there is a windfall of about $40 per barrel. The government can do a strategic balancing by compensating the loses expected to be incurred from the scrapping and reduction of some of these taxes by the gains made as a result of the windfall.

 

Baskin Africa therefore, suggest that the government should consider scrapping and reducing the threshold of the following taxes and levies on petroleum products:

 

  1. A reduction in the Price Stabilization and Recovery Levy by 50%, so that the remaining 50% can still make the revenue for the premix fuel subsidy.

 

  1. Government must scrap the Energy Debt Recovery Levy

 

  1. The government should also scrap the Sanitation and Pollution Levy and rather impose it as a direct discriminatory tax on giant companies that engage in the pollution.

 

  1. Scrap the Special Petroleum Tax since it has outlived its usefulness.

 

  1. Reduce the Energy Sector Recovery Levy by 50%.

 

If the above suggested measures are heeded, there will be stability and reduction in the final price the consumer is expected to pay even with the price deregulation policy is in place.

 

The government must be concerned about the notice served by 16 transport companies to increase transport fares by 30%. These unions cite among others, fuel price increases and increases in the cost of maintenance as the reasons for their decision. This will surely have a multiplier effect on the ordinary Ghanaian, in that, cost of goods and services will increase. The accompanying cascading effect on the poor masses will be dire with the inequality gap expected to widen in the final analysis.

 

-Signed-

 

Issifu Seidu Kudus Gbeadese

(Executive Secretary-Baskin Africa)

0244198031



 

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