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Industry intensifies pressure to get 15% petroleum tax scrapped

  • SOURCE: Citifmonline | qwesa2big
  • Analysts have intensified appeals for government to scrap the Special Petroleum Tax on petroleum products.

    They argue this will give more meaning to attempts to reduce the plight of consumers following rising global oil prices.

    The comments follow a recent NPA announcement of a seventy percent reduction in the price recovery and stabilization levy calculated on petroleum prices.

    The price stabilization levy is but one of the eight units that determine the total tax component on any litre of fuel purchased.

    Taxes on diesel, LPG drop

    The figure has been reduced from 10 to 3 pesewas for diesel and LPG but that of petrol remained unchanged at 12 pesewas.

    With this, the total tax component on a litre of diesel has dropped from 1 cedi 16 pesewas to 1 cedi 8 pesewas.

    Also, the tax component on a litre of LPG has declined from 54 pesewas to 46 pesewas.

    But that of petrol is still at 1 cedi 18 pesewas.

    The reduction has still not impacted ex-pump prices hence the call for a massive review of the special petroleum tax.

    COPEC, IES push for tax to be scrapped

    The Executive Secretary of the Chamber of Petroleum Consumers, COPEC Duncan Amoah argued,

    “When the cedi loses its value and it affects ex-refinery prices, SPT will also go up. So if the SPT is fixed at a particular price, it means that irrespective of what happens on the international market or what happens to the cedi, it means that the tax component will not change.”

    The Institute of Energy Security couldn’t agree more, but its Principal Research Analyst, Richmond Rockson wants the Special Petroleum Tax to be scrapped completely.

    “Our position is for government to scrap it totally, it is like a VAT on petroleum products. Already levies and taxes on petroleum products are too many; we are looking at about fifty percent of the petroleum prices and we think it is too much,” he stressed.

    Gov’t reduces petroleum tax to 15%

    The Special Petroleum Tax initially 17.5%, was placed on petroleum products by the erstwhile NDC government in 2015.

    Though the NPP government had criticized its introduction, it only reviewed it downwards by only 2.5 percent in the 2017 budget.

    Meanwhile a former Deputy Minister of Power, John Jinapor wants the government to seek Parliamentary approval before implementing the reduction in price stabilization and recovery levy.

    A development, Richmond Rockson explains could hamper the anticipated reduction altogether if not properly managed.

    “If somebody decides to go to court today for interpretation that will mean that the government will have to hold on with the decision. But it is important for the government to explain clearly what it intends doing either a decision on subsidy or a total review of the ESLA which means they may have to go back to Parliament,” he suggested.

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