Special Petroleum Tax to be reviewed to 15%
The 17.5 per cent special tax introduced on certain petroleum products by the previous government in 2014 is to be reviewed to 15 per cent in 2017. The revision of the Special Petroleum Tax (SPT), is part of a number of taxes earmarked to be either reviewed or abolished in the 2017 budget of government, as part of efforts to move from taxation to production to boost economic growth.
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The Finance Minister, Ken Ofori-Atta, presenting the 2017 budget statement of the government on March 2, said a number of tax measures introduced in recent years in an attempt to deal with the revenue shortfalls have proven to be nuisance taxes, imposing a burden on the private sector and on the average Ghanaian citizen.
“As part of our commitment to re-energise the private sector, the Government has decided, as pledged, to review these taxes, to provide relief for businesses. Through this budget, we will abolish excise duty on petroleum. Mr Speaker, we will reduce the special petroleum tax rate from 17.5 per cent to 15 per cent,” he said.
According to the minister, it was the firm belief of the government that with the appropriate policy interventions, it will set the pace for job creation opportunities as well as secure a bright future for the economy.
“The policy initiatives are therefore expected to improve the business environment, instill fiscal discipline, and promote investments in critical infrastructure especially in rural and deprived areas” he said.
The budget was on the theme, “Sowing the seeds for growth and jobs.”
Energy sector levy
The Energy Sector Levies Act, 2015 (ESLA) Act 899 was enacted in 2015 with an objective of the Act was to “consolidate existing energy sector levies to ensure efficient utilisation of proceeds generated from the levies, impose a price stabilisation and recoveries levy to facilitate sustainable long term investments in the energy sector, and to provide for other related matters.
The Finance Minister explained that, a total amount of GH¢3.2 billion was programmed to be collected as in 2016, but actual collections stood at GH¢3.3 billion, exceeding the programmed target by GH¢42.64 million or 1.3 per cent.
“The favourable outturn was mainly as a result of the balance of GH¢83.27 million brought forward from existing energy related accounts prior to the establishment of Act as well as marginal over performance in Energy Debt Recovery Levy (EDRL) collections over the period.
The Finance Minister, however, noted that there were some challenges with the utilisation of the proceeds from the levy, hence the need for an amendment of the Act.
The challenges, he noted had to do with ambiguities in the Law and its implementation schedule as well as the need for a consolidation of the ESLA and other levies in the Petroleum Price Buildup mechanism.
“Mr Speaker, a few challenges have been encountered in the utilisation of the proceeds. These challenges would require an amendment of the Act to ensure a more efficient mechanism for collection, allocation, utilisation, and reporting of the levies. Consequently, a proposal for amendment will be submitted to this August House for consideration and approval,” he said.
Chamber of Petroleum Consumers react
The Executive Secretary for the Chamber of Petroleum Consumers, Mr Duncan Amoah told the GRAPHIC BUSINESS that although the review was commendable, it could have been better.
“It is okay because the admission by government in itself to do something about fuel prices is a good step and we will commend them, but I can assure you that we would also begin the process to re-engage government to ensure that in the minimum, a lot more is done,” he said.
The chamber, he however, explained was expecting a repositioning or a conversion of the SPT from the current ex-depot arrangement to probably ex- refinery or import price position. Percentage to specific figures.
“What we were expecting was a repositioning or a conversion of the 17.5 per cent to specific figures, but unfortunately, we didn’t get that. Government should decide to charge, say, a flat rate of 20 or 30 pesewas instead of SPT being at a percentage,” he said in an interview.
