Parliament Approves 2% Fuel Reduction
Prices of petroleum products in the country especially petrol and diesel are expected to go down from the present GH₵4.67 per litre to GH₵4.51 per litre and GH₵4.67per litre to GH₵4.48 per litre respectively.
This follows Parliament’s approval of the Special Petroleum Tax (Amendment) Bill, 2018 which amends the Special Petroleum Tax Act, 2014 (Act 879) that enabled an average 2% reduction and to provide for change from an ad valorem rate to specific tax rate on selected petroleum products.
Presenting a report of the Finance Committee on the Special Petroleum Tax (Amendment) Bill, 2018, under a certificate of urgency in order to provide relief to consumers, Chairman of the Committee, Dr. Mark Assibey Yeboah said the move by government was necessitated by increasing prices of petroleum products on the international market which was not envisaged during the preparation of the 2018 budget statement.
He noted that the fiscal nature of the bill will result in expected revenue to government to the tune of GH₵47.90 million per annum, other things being equal.
The Chairman stated that amendment will cushion consumers by ensuring that prices of petroleum products are stabilize locally no matter what the price it may be at the world stage
“The tax was introduced as an ad valorem – it is a percentage tax so that if its 10percent and the price of crude is 100 and you are paying $10 and it goes to 200 and you paying $20.
“It doesn’t help so that whenever crude oil prices are going up on the world market, the tax on it also goes up, we are changing it from an ad valorem to specific tax – so that what you are paying, if its 100 and goes to 200, you are still paying $10, so the consumers know of the tax rate and now that crude oil prices have been inching up on the world market there is a cushion” Dr Assibey-Yeboah said in an interview.
According to the Committee report, the amendment is in line with government’s objective to shift focus from taxation to production in order to stimulate growth.
The report of the Committee also noted that the National Petroleum Authority (NPA) informed members of the Committee that effective 16th February, 2018 the prices of petrol and diesel are anticipated to go down by 1.39percent and 2.6percent respectively under the pricing mechanism that pertains now but dependent on the passage of the Special Petroleum Tax (Amendment) Bill, 2018 and its subsequent assent into law.
The Committee noted that if the bill is not assented to before the next pricing window of the 16th February, 2018, then the full impact of the price reduction will only be felt at the beginning of the next pricing window at the beginning of March,2018.
The Committee therefore came to the determination having considered that the rising cost of petroleum products, and anything impacting businesses negatively, the bill should be considered under a certificate of urgency.
The Special Petroleum Tax was introduced by the previous NDC administration in 2014 at 17.5percent but the NPP government reduced it to 15percent in the 2017 budget.
The report Dr Assibey-Yeboah noted that if the ad valorem was stayed, it will have moved from 17.5percent to about 12.5percent.
“Regardless prices are coming down, this is a big relief to everybody and I will urge government to continue with this gradualist approach of reducing the taxes on these products.
It was 17.5percent and came down to around 15percent and now 12.5percent so this is good news and a welcome news for consumers” Dr Assibey-Yeboah said.
The NPP Government pledged to remove some taxes to provide relief to Ghanaians and to shift the focus of tax policy from the introduction of new taxes to improving tax compliance as a basis for revenue generation.
The amendment Bill was therefore introduced to reduce the tax burden imposed on taxpayers by unintended surge in the exchange rate and price of petroleum products.
The Bill went through all the stages yesterday under a certificate of urgency before passage.
By: Christian Kpesese/ thePublisher
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