The Ghana National Chamber of Commerce and Industry (GNCCI) has raised concerns that the newly proposed GHC 1 Energy Sector Recovery Levy on fuel may undermine recent progress in reducing inflation and fuel prices.
Although the CEO of GNCCI, Mark Badu Aboagye, believes the move is a bitter pill the country must swallow to save the country’s troubled energy sector, it will ultimately hurt businesses and consumers alike.
Speaking on the issue, he cautioned that although the Chamber is not against efforts to resolve the country’s persistent energy challenges, the timing and rate of the new levy raise serious concerns for businesses already grappling with high operational costs.
He noted that businesses factor fuel costs heavily into production, and any increase immediately affects their pricing models.
“If you look at the build-up for petroleum prices, there are about 17 or so different levies and taxes, so you are going to add another. It is important that the people also get to know. We are not against it. We are of the opinion that at least the rate should have been a bit lower so that we can at least enjoy the benefit of this appreciation. Because we are all expecting that once the prices of petroleum products go down, then fares will also go down and prices will also go down,” he explained.
Mark Badu Aboagye added that while supporting a stable power sector is crucial for business continuity, the government must balance its revenue-generating ambitions with the need to create an enabling business environment.
He urged authorities to consider lowering the rate of the new levy or explore alternative sources of funding to stabilise the energy sector.
He therefore cautioned consumers not to expect any reduction in the prices of goods due to the levy since it has worsened the cost of business operations.
The CEO laments that,” If you keep on introducing new levels of taxes and levies, you don’t expect that prices will immediately go down. I think now they should give us some relief, if they really want prices to go down. We don’t expect that they introduce new levies; they expect that prices will go down. Businesses obviously will add up once it increases their cost of production.
This, he believes, sends conflicting signals to the market. The government, Mark Badu Aboagye says, must work on giving businesses and consumers breathing space to enjoy the benefits of macroeconomic improvements. You can’t call for lower prices while adding new levies.
