Yesterday, Ghanaians woke up to the shocking news of GHC1 per litre levy imposition on all petroleum product. This bill, which was carried and passed under a certificate of urgency, is intended to cushion the government’s efforts to defray the rather ballooning energy sector debts and by a greater extend end the vicious cycle of Dumsor. Since its announcement, however, the move has drawn massive criticism across the breadth of public opinions, with many warnings of the dire consequence of additional costs on petroleum prices. This short notes sheds light on the opinions of the public and that of mine, on this development:
Ministers of Finance and Energy Eroding Public Trust
At his vetting, the finance minister was very clear about increasing Ghana’s tax to GD from 13.5% to 16.5 % without increasing or introducing new taxes. While responding to his government promise to scrap E-levy, COVID-19 levy and Betting taxes, Ato Forson dismissed the view that these scrapped taxes will be replaced by equally punitive ones. With the imposition of this GHC 1 levy on every litter of petroleum product invariably defeats Ato’s stance. This rather intriguing turn of events rather exposes some level of inconsistency, lack of principle and dishonesty in our body politics, a development that further erodes the fast-declining confidence in politicians and by extension, Ghana’s fledgling democracy. Most so, the Energy Minister’s public utterances regarding the end of Dumsor, has come under intense scrutiny, as a section of the public have queried why a dumsor levy will be imposed when the Minister has publicly announced an end to the phenomenon. Listening to the Minister of Energy on Citi FM’s morning show, one gets the sense that the levy will not even be enough to defray the $3.1 billion energy sector debt while providing the much-needed funding to support the purchase of liquid fuels to power our thermals. Till date, we the good people of Ghana are yet to come to terms with why the rather astronomical cost of power by the IPPs are yet to be renegotiation. It is said that Ghana pays 18 cent per kilowatt hour for power, the highest in the sub-region. These two Ministers , whose Ministries are very critical, must ensure they do not erode the good will and public confidence with their conduct and utterances. Ato, this move is bad.
Stakeholder Engagements
For a government that had vehemently opposed the E-levy, citing lack of consultation and stakeholder engagements, the least we expected the new administration to do was to impose a tax under certificate of urgency, throwing to the wind the need for extensive stakeholder engagements and consultation. From all indication, the government would not have the pushback that the imposition of this tax could bring, hence the decision to muscle up its numbers in parliament for the purpose. It is therefore not surprising that stakeholders, including civil society groups, journalists, energy analysts, have been unanimous in their condemnation of the new levy.
Push back from across the board
From every indication, civil society groups and energy analysts have not been enthused by this rather ambush of a tax. The Association of Oil Marketing Companies, led by its President, has not minced words in condemning the move. Franklyn Cudjoe of Imani Africa, has roundly criticised same, calling it the fastest pocket picking tax. Dr. Steve Mathew, a prominent expert who led IPAC for years, has equally warned of the damning impact this tax could have on the cost of food and transport prices. Duncan Amoah, a known energy analyst has equally berated the government for rather burdening the Ghanaian public with so many levies when the inefficiencies and mismanagement within the energy sector continues unabated. On a rather animated noted the President of the Concerned Drivers Union strongly decried the move, promising to fight same with every energy the union of which he leads, could muster. For the drivers, the decision of government to almost compel them to reduce their fares, only to impose additional GHC1 on every litre of fuel smacks of bad faith, which their members will roundly resist, if same is maintained.
For his part Ben Boakye of ACEP stated: ‘’Just avoid being Ofori-Atta 2.0. ESLA is 10 years old—a terrible way to celebrate this anniversary. The pockets of people don’t fix inefficiencies, decisive action does. The beneficiaries of these inefficiencies walk down our streets as the millionaires of the nation— they invent nothing.’’
Even known NDC sympathizers are faxed at this news. The likes of Cadman Atta Mills, Oliver and others have not responded positively to this development. Across board, many have been taken aback on this and criticism has been both wide and dire.
Downstream Sector
Already the downstream petroleum sector is bedevilled by the twin impacts of taxes and debts. Interestingly most of these taxes and levies were imposed with the view to addressing the very challenges this new levy is seeking to address. Given our own failed capacities to leverage some of these levies and taxes from petroleum in the past, how are we to accept that this case would be any different from how we have fared in the past. Questions have been raised about how the Energy Sector Recovery debt and Energy Development Levies have been used. Some people have raised questions about accountability and transparency in the usage of the over GHC 9.7 billion cedis that annually collected by way of taxes, levies and margins. Without a doubt the downstream sector risk breaking don if the government appetite and penchant for resorting to it for revenues is not quenched. Already the Ministers of Interior and Local governments have asked for similar levies to be imposed for the retooling of the Ghana Fire Service and the Sanitation purposes, respectively.
IMPACT
This new tax, as many analysts, have predicted will bring unbearable impact on the consumer. As the innocent Ghanaian continue to battle the throes of high inflation, salary stagnation, and general high cost of living, the least expected of a government which promised a reset is to have these obnoxious taxes clandestinely imposed. Without a doubt this imposition will impact the cost of transportation, which will in turn, drive up the cost of food and other essential commodities.
Conclusion:
From all that the public and experts have said, it would be injurious for the government to proceed to implement this. Maybe extensive stakeholder engagement would be required for consensus regarding the best amount to charge for the purpose.
Policy Analyst/Communications Consultant
Samuel Boateng Osarfo