THE government could return more than GH¢1 per litre to fuel consumers if proposed tax cuts are implemented, according to the Executive Secretary of the Chamber of Petroleum Consumers (COPEC), Duncan Amoah, as authorities move to cushion households from rising global oil prices.
The government has indicated that it will scale down several petroleum levies following a Cabinet directive to ease pressure at the pumps.
The most immediate adjustment, Mr Amoah said, will be on the energy sector shortfall and recovery levy — recently increased to GH¢1.00 per litre, to be halved to 50 pesewas.
The reduction would partially roll back what consumers have dubbed the “dumsor levy”, while preserving some revenue to sustain power generation and avoid a resurgence of outages.
Further relief could come from cuts to other components. Amoah said COPEC would recommend reducing the road fund levy from 48 pesewas to 24 pesewas per litre, and the special petroleum tax from 46 pesewas to about 23 pesewas.
A separate downward adjustment of the Unified Petroleum Pricing Fund margin — from 90 pesewas to 60 pesewas — could deliver an additional 30 pesewas per litre in savings.
Taken together, the measures could lower pump prices by about GH¢1.27 per litre over the next month, Amoah said, without causing significant disruption to government revenues.
The proposed cuts follow a Cabinet meeting on Thursday, April 9, where officials reviewed the impact of recent global developments on the economy. Announcing the decision, Felix Kwakye Ofosu said ministers had been directed to act swiftly.
“The Finance and Energy Ministers should take immediate steps to reduce the price of fuel through the removal of some taxes and margins,” he said, adding that the changes are expected to take effect in the next pricing window.
The move comes after sustained increases in fuel prices across the past two pricing cycles, driven largely by geopolitical tensions in the Middle East involving the US, Iran and Israel, which have disrupted supply chains and pushed up global crude benchmarks.
Kwakye Ofosu said constraints along the Strait of Hormuz — a critical artery for global oil shipments — had compounded the situation, raising freight costs and insurance premiums.
While the government has benefited from a stronger cedi and moderating inflation, he acknowledged that pump prices have continued to rise, posing risks to transport costs and broader consumer prices.
“These increases, if not checked, could spill over into the prices of other goods and services,” he said.
Policy trade-offs
The proposed intervention underscores a familiar policy dilemma for the government: balancing consumer relief with fiscal consolidation.
Fuel taxes and levies remain a significant source of non-oil revenue, and any broad-based reduction — even if temporary — could narrow fiscal space at a time when authorities are seeking to sustain macroeconomic stability.
Analysts say the one-month window being considered suggests a cautious approach, allowing policymakers to respond to immediate price pressures without locking in permanent revenue losses.
It also leaves room for a reversal should global oil markets stabilise or domestic currency gains strengthen further.
At the same time, the structure of the proposed cuts — spreading reductions across multiple levies rather than eliminating a single tax — points to an attempt to distribute the fiscal impact while maintaining critical funding streams, particularly for the energy sector.
Officials argue that recent macroeconomic stability has prevented sharper increases, compared with previous shocks such as the Russia-Ukraine conflict.
Still, the government is seeking targeted interventions to prevent a further squeeze on living standards.
Source:
www.graphic.com.gh