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The Chamber of Petroleum Consumers (COPEC) has renewed calls on the government to either reduce taxes on petroleum products or take off some of the fuel taxes to lessen the burden on consumers.
Alternatively, it suggested a formula to change the total levies on petroleum products with every change in the dollar/cedi rate.
Currently, the total taxes and levies on retail prices of petrol and diesel, for instance, is about 22.91%, a phenomenon which, coupled with the depreciating Ghana cedi, pushes prices of goods and services up.
The call comes at a time when the chamber in a press statement released on on June 30, predicted a rise in petroleum products, which took effect from July 1, the first pricing window for the new month.
Since last week, the retail price of petrol, diesel and liquefied petroleum gas (LPG) increased at pumps across the country.
The price increases were occasioned primarily by a further strengthening of the dollar against the cedi from an average of $1 to GH¢14.4788 to $1 to GH¢15.2779 ( -1.89%) during the month.
COPEC had projected that the retail price of petrol is expected to increase by 2.17 per cent of the current mean pump retail price of GH¢14.17 per litre to GH¢15.20 per litre.
Since then, the price of diesel has risen to GH¢15.21 per litre, while LGP is also selling between GH¢13.24 per kg and GH¢14.64 per kg on average.
Since the beginning of the first pricing window, it is evident on the market that most, if not all Oil Marketing Companies (OMCs), have adjusted their prices accordingly.
Analysts have maintained that the continuous rise in the prices of petroleum products in the country will make it difficult to achieve the targeted inflation figure of below 20 at the end of the year.
They argued that the high cost of transport, particularly with those that carry food from the hinterlands, will continue to impact food prices as they spread the high cost of transportation onto the consumers.
Food inflation in the country has been a major driver of inflation in the country because of the weight it carries in the computation process.
Inflation dropped significantly from the highest in decades of 54% a couple of years ago to the present rate of 23.1% as of May this year.
The year-on-year inflation rate as measured by the CPI was 23.1 per cent in May 2024. This rate of inflation for May 2024 is the percentage change in the Consumer Price Index (CPI) over the twelve months, from May 2023 to May 2024.
The Food and Non-alcoholic beverages inflation rate recorded a year-on-year inflation rate of 22.6% in May 2024. The Non-Food group recorded a year-on-year inflation rate of 23.6% in the same year under review.
There are fears that the more prices of petroleum products rise, the worse the situation will become for food inflation.
Reports say over 40% of worker’s disposal income is spent on food and, therefore, the more the prices of food rise, the more people are likely to spend on food against their will, leaving very little for other expenses and investment.
That means, in the view of analysts, that, reducing taxes on petroleum products as proposed by COPEC was one in the right direction to help the citizenry.
COPEC also urged the government not to relent in its quest to get the Tema Oil Refinery (TOR) back on stream in order to, as it described it, avoid or reduce the importation of finished products, with associated fuel contamination issues.
That, when done, will also help ease pressure on the demand for dollars to purchase refined petroleum products from the international market.
The call, albeit, ignored for long by governments, raises serious questions about why the government is not able to revive TOR when fuel consumers have been paying a levy over the last 22 years to enable the revival of the TOR.
It has increasingly become evident that governments use the proceeds from the TOR Recovery Levy for other purposes rather than reviving the ailing refinery.
One of the mysteries about TOR is why the government has not been able to bring the refinery back on stream but keeps pumping money into the business only for it to be dissipated by boards and management who seem clearly clueless about what to do to bring back the decades-old refinery, once the toast in the sub-region.
Perhaps, the best option is to remove the TOR levy to ease the burden on consumers.
The call to reduce taxes on petroleum products is a good one, which must no longer be ignored.
Much as the government is making some good money by way of tax revenue, the rippling effect on businesses and households is worrying because the higher the prices of fuel, the worse the inflation rate becomes.
The cost of living in the country is also not funny anymore, hence the need for the government to carefully sit to weigh the impact of high taxes on petroleum products and act accordingly to ease the pressure on the pockets of the masses.
