The Executive Director of the Centre for Environmental Management and Sustainable Energy (CEMSE), Benjamin Nsiah, has raised concerns over the government’s decision to suspend certain fuel taxes, describing the move as unnecessary and potentially unconstitutional.
Mr Nsiah questioned the legal basis for suspending statutory levies established by Acts of Parliament, particularly at a time when Parliament is on recess. He argued that such taxes cannot be altered without due legislative process.
Citing key examples on the Gold Morning Conversation on friday April 10, he pointed to the Special Petroleum Tax, introduced in 2014 and later amended in 2018, and the Energy Sector Levy Act of 2015, both of which were enacted through parliamentary approval.
“Special petroleum tax was introduced by an Act of Parliament. The Energy Sector Levy Act was also introduced by an Act of Parliament,” he stated, adding that it remains unclear how the executive intends to suspend these levies within a short period.
He suggested that the government might resort to an Executive Instrument but maintained that such an approach raises constitutional questions.
Mr Nsiah further argued that the tax suspension may not be necessary, noting that fuel prices on the international market are already declining. He revealed that diesel prices have dropped by about $70 per metric tonne and projected that local fuel prices could fall naturally in the next pricing window beginning April 16.
“Critically assessing the market, the price of diesel may even decline… without any tax cut,” he said.
He cautioned against what he described as reactionary and short-term fiscal measures, warning that suspending taxes now could create challenges if global fuel prices rise again, making it difficult to reintroduce the levies.
Instead, he proposed a more sustainable approach through a dual or balanced pricing model, where fuel prices are capped based on macroeconomic targets while allowing for market adjustments.
Mr Nsiah also highlighted potential risks to Oil Marketing Companies (OMCs), particularly smaller operators who rely on cash-and-carry systems. According to him, an immediate implementation of tax cuts could lead to financial losses for companies holding previously taxed fuel stock.
He recommended a transition period of two to three weeks to allow the market to adjust and for OMCs to clear existing inventory.
“We ought to have given ourselves some two weeks or three weeks so that the market adjusts itself,” he advised.
The government is yet to provide detailed clarification on the legal and implementation framework for the proposed tax suspension.
Story By: Errah Salifu Razak( Intern, UNIMAC)
