Taxes on Fuel Can’t be Reduced Again – NPA
Ghanaians expecting a downward review or the scrapping of some taxes imposed on petroleum products, would have to dump their hopes since government is not ready to barge in.
The Chief Executive Officer of the National Petroleum Authority (NPA), Hassan Tampuli, at a press conference on Wednesday, gave a litany of reasons why the about ten taxes and margins on fuel prices could not be taken off.
He said the taxes are in the interest of consumers.
“…When we hear calls for government to remove those nuisance taxes, we’ve removed the nuisance taxes – these are taxes, levies and statutory margins that every responsible government will ensure that [ they] will remain in the price build up to ensure efficiency, availability of products, quality of the products and to ensure that for every [petroleum] product that we consume within the country, taxes are paid on every litre of petroleum products consumed.”
Fuel prices hit all-year-high, taxes must go down
Fuel prices have hit all-year-high in September 2017, with petrol selling at an average price of GHc4.29 at the pumps, and diesel going for an average of GHc4.23 per litre.
The surge in fuel prices have squarely been blamed on among other things the about ten taxes and margins slapped on the products.
This has compelled some groups and policy think tanks including the Institute of Energy Security and the Chamber of Petroleum Consumers, to call on government to review the taxes to make the products cheaper on the Ghanaian market.
We’ve scrapped some
But the NPA CEO said government’s hands are tied.
He noted that, when the New Patriotic Party (NPP) took over the administration of the country, it scrapped some of the taxes which saw a three percent cut in the prices of fuel, adding that a further reduction will be suicidal.
Below are some of the reasons Mr. Tampuli gave for their inability to reduce the taxes:
Primary distribution margin: It is in the price build up to ensure that products are moved from the coast depot to the inland depots.
So, the products come through Accra plains depot of BOST, Tema Oil Refinery and some other private depots. We have to move those products to Kumasi depot, Buipe, Bolgatanga, Maame Water, Akosombo – that margin is supposed to take care the freight cost or transportation of the fuel from these depots to the inland depots so that consumers around those depots do not pay different prices by reason of the movement in the primary distribution. That is what it’s supposed to be.
UNIFIED PETROLEUM PRICING FUND (UPPF) margin: It’s supposed to ensure a situation where you pay the same price for fuel products anywhere you find yourself in the country. Embedded in the UPPF margin is the pay for the [tanker driver’s] mate who sits in the truck moved from the depot to the distribution outlets. The drivers pay is in there, everything about the transportation cost – the transport owner, the transporters, all of them have their margins coming from this particular UPPF margin.
BOST margin: This is about three percent. BOST margin is supposed to take care of the maintenance of pipelines of the depots – BOST has depots in Accra plains, Maame Water, Buipe, Kumasi and Bolgatanga. All of these depots are supposed to be taken care of one way or the other.
Fuel marking margin: This is a chemical composition which is used to identify the products that are supposed to remain in the country, and not for exports. So it distinguishes the products for exports, and also distinguishes the locally consumed products from those meant for the mines and marines. So every product that we consume in our cars and machines have this chemical composition. That is also what we use to indicate the total consumption within the country for not only identifying dilution and adulteration, but to also see how much taxes we need to get so we correlate almost entirely with the Ghana Revenue Authority.
Distribution margin: Oil marketing companies have investments, they need to have returns on, so they could continue to be in business and ensure that products are within their retail outlets across the country for us to benefit. That distribution margin goes to these marketers; it doesn’t come to government at all.
Dealers/retailers margin: This part of margin goes to the dealer; it does not go the oil marketing company. It goes to the individual dealers who own those retail outlets.
LPG filling plants: That is also used to take care of the distribution of LPG across the country that one does not also come to government of Ghana’s kitty neither does it come to the NPA.
Mr. Tampuli insisted that, tampering with the taxes could amount to shortages in some areas in the country.
“If you touch the primary distribution margin, we are going to get shortages in some other zones in the country. Is that what we are looking at? If you tamper with the UPPF margin, then you are going to ensure that we are going full deregulation. That means that you can sell at any price and include in it your transportation cost without any government intervention – that is not the way to go. And then when you look at the dealers’ margin…those have to also be paid for,” he added.