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The government has proposed the introduction of an oil tax to help restore the country’s economy following the effect of the Covid-19 pandemic on economies around the world.
Acting Finance Minister Osei Kyei-Mensah-Bonsu made this known on Friday March 12 during his presentation on the 2021 budget statement.
According to him, Ghana has over the years faced economic difficulties resulting from high excess capacity payments in the energy sector.
The difficulties, he said, stem from power purchase agreements (PPAs) signed by the government led by John Mahama and this new tax will help pay the excess capacity charges brought about by the cost of contracts with the government. PPA.
“Despite the substantial progress made by the Akufo-Addo government, there is a need to find additional resources to cover excess capacity charges resulting from the Power Purchase Agreements (PPAs) signed by the previous government, which required even payments for capacity charges. when the plants concerned were inactive or unused.
“Mr. President, it has become absolutely necessary for the government to consider a revision of the levies in the energy sector. The energy sector recovery tax of 20 pesewas per liter on gasoline / diesel under the ESLA is hereby submitted to this Assembly for approval ”.
He added that although President Akufo-Addo, during his first term, abolished excise taxes and reduced the special petroleum tax from 17.5% to 13% to mitigate the impact on prices domestic oil, the introduction of this proposed new tax is “due to the difficulties faced by our economy due to the increase in excess capacity payments in the energy sector, which have not been reflected in the electricity tariffs. “
It has been claimed that part of the country’s economic problems is the issue of paying for unused electricity due to the signing of PPAs, which depletes the state of its financial resources.
According to the current government, the PPA deals were a hasty move by Mahama in an attempt to end the dumsor.
The government says it currently pays more than $ 500 million per year for unused electricity, stressing that the rates agreed were not competitive and have contributed significantly to the debt build-up in the sector and to excess energy supply.
Meanwhile, Kyei-Mensah-Bonsu said the proposed levy, if approved by parliament, will help pay off debt in the energy sector.
According to him, this tax of 20 pesos on the price of a liter of gasoline / diesel, representing a 5.7% increase in the price of petroleum products at the pump, includes a tax on sanitation and pollution.
“Mr. Chairman, I must note that based on current world crude oil prices, the implementation of the two proposed charges for remediation and pollution as well as the payment of excess capacity charges would result in an increase of 5, 7% of oil prices at the pump, ”he added.
Mr. Kyei-Mensa-Bonsu said the proposed tax will include a sanitation and pollution tax.
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