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Fuel prices go down as Parliament passes Special Petroleum Tax Bill

Fuel prices go down as Parliament passes Special Petroleum Tax Bill Featured

Parliament has passed the Special Petroleum Tax (Amendment) Bill, 2018 to reduce the special petroleum tax from 15 to 13 per cent.

With the passage of the bill, the ex-pump price of petrol will go down by 3.39 per cent, while that of diesel will reduce by 4.14 per cent.

The bill, which was passed under a certificate of urgency, amended the Special Petroleum Tax Act, 2014 (Act 879) and provided for a change from an ad valorem rate to a specific tax rate on selected petroleum products.

Presenting the report of the Finance Committee of Parliament on the bill, its Chairman, Dr Mark Assibey-Yeboah, said in the estimation of the National Petroleum Authority (NPA), upon the passage of the bill into law, the price of petrol would reduce from the present GH¢4.67 per litre to GH¢4.51, while diesel would sell at GH¢4.48 per litre, instead of the current price of GH¢4.67 per litre.

He said with the deregulated market, the price calculations by the NPA only showed indicative ceilings and not necessarily the actual prices at each pump station, since the oil marketing companies (OMCs) were free to sell competitively below the indicative ceiling.

Dr Assibey-Yeboah said the passage of the bill would bring relief to consumers of petroleum products in the country.

On the fiscal impact of the bill, he said the reduction would result in an expected revenue loss of GH¢47.90 million per annum to the government, other things being equal.

The reduction of the Special Petroleum Tax came in the wake of a recent demonstration by commercial drivers, the Industrial and Commercial Workers Union (ICU) and the Chamber of Petroleum Consumers (COPEC) over hikes in the prices of petroleum products.

The Minority in Parliament also held a press conference and urged the government to remove the Special Petroleum Tax to lower fuel prices at the pumps and bring relief to Ghanaians.

Majority defends bill

Contributing to the debate, a Deputy Minister of Finance, Mr Kwaku Kwarteng, said the New Patriotic Party (NPP) government had first reduced the Special Petroleum Tax from 17.5 to 15 per cent and now reduced it further to 13 per cent, bringing the total reduction to 4.5 per cent.

He said he was surprised that members of the erstwhile National Democratic Congress (NDC) government, which had introduced the tax, were now asking the government to scrap it.

Mr Kwarteng said the NPP in opposition had criticised the bill because while crude oil prices were going down on the international market, "we were paying more".

He said the amendment would make the tax fixed, so that it would not be increased even if world oil prices went down.

He said the government "does not benefit from price hikes, nor is it interested in inflicting hardship on Ghanaians".

The Minister of Monitoring and Evaluation, Dr Anthony Osei Akoto, said the bill was in tandem with the government's aim of shifting the focus of tax policy from the introduction of new taxes to improving tax compliance as a basis for revenue generation.

Besides, he said, it was part of moves to shift focus from taxation to production in order to stimulate economic growth and development.

Scrap the bill

But the Minority in Parliament insisted that the two per cent reduction in the tax was insignificant and, therefore, urged the government to fulfil its campaign promise by scrapping it.

The MP for Yapei/Kusawgu and former Deputy Minister of Power, Mr John Abdulai Jinapor, said the NDC government had introduced the tax to shore up government finances due to the continued reduction in the world market prices of crude oil.

However, he said, with world market prices of crude oil rising, the government needed to scrap the tax to bring relief to Ghanaians.

He stressed the need for the government to stand on its promise to scrap the tax.

The MP for Asawase and Minority Chief Whip, Alhaji Mohammed-Mubarak Muntaka, said the NPP in opposition had claimed that Ghanaians were suffering with the introduction of the tax and promised to scrap it if given the nod.

Therefore, he said, it was sad that the government was not fulfilling its promise to scrap the tax.

Additional Info

  • Origin: Graphiconline