1.0 INTRODUCTION

The Government through a certificate of urgency passed the new Energy Sector Levies Act (Act 899) in December 2015, which has now taken effect since 4th January 2016. The Act provides for the harmonization of major energy sector levies and taxes. Government officials have explained that the levies are intended to mobilize revenues to service government debts especially in the road sector and power sector. It is common, as we know that most governments around the world raise revenue through petroleum taxes and levies because it is easier to collect; and also the demand for the products is inelastic. In some cases, such levies are intended to encourage energy conservation and climate justice. We estimate that based on volumes of petroleum consumption (Petrol, Diesel and LPG) in 2015, the new levies will generate an incremental revenue of GHS3.2 billion annually. This is the burden the new levies impose on petroleum consumers. Taxes are important for the development of every nation. To that extent, ACEP appreciates the need for citizens to contribute reasonably to support government programmes. Therefore we do not oppose taxes; but we are of the view that imposition of taxes should be in sync with good governance practices of transparency and accountability rooted in broad consultation with citizens. The Energy Sector Levies lasted only three days in parliament without providing for public consultations in spite of the enormous burden the Act seeks to put on citizens. Such actions are likely to affect public trust in their governments, which could undermine government’s ability to implement good policies in future. It is also important to note that, over-reliance on petroleum taxes and levies could adversely affect the economy in many ways – inflation, growth deceleration, social development challenges, etc.