Gov't could lose nearly GH¢500m a month for every GH¢1 cut from fuel taxes

Cabinet has directed the suspension of some taxes, levies and margins on petroleum products in response to rising crude prices following the US-Israel-Iran conflict. The Minister for Government Communications said the move is intended to reduce the burden on consumers as fuel prices respond to developments in global oil markets. "Cabinet has directed the Finance and Energy Ministers to take immediate steps to reduce the price of fuel through the removal of some taxes and margins on fuel, effective the next pricing window." The intervention will remain in force for an initial period of four weeks.

Currently, a litre of petrol or diesel carries total taxes and margins of about GH¢4.20. At the prevailing price floor of about GH¢13.30 for petrol and GH¢17.10 for diesel, these taxes and margins account for roughly 31% of petrol prices and 24% of diesel prices. The single largest levy within the tax structure is the Energy Sector Shortfall and Debt Recovery Levy, which stands at GH¢1.95 per litre after the introduction of the additional GH¢1 ESLA levy. The Energy Fund Levy, Road Fund Levy and Special Petroleum Tax together bring total taxes to about GH¢2.90 per litre, while margins account for approximately GH¢1.37. Margins are distributed among various agencies within the petroleum sector, including the National Petroleum Authority (NPA), the Petroleum Hub Development Corporation (PHDC) and the Bulk Oil Storage and Transportation Company (BOST). Consumers currently pay about 26 pesewa per litre for the Primary Distribution Margin. The UPPF stood at 22 pesewas in 2018 but has since risen to 90 pesewas per litre.

The President also reminded ministers and senior government officials to adhere strictly