The Chief Executive Officer of the Association of Oil Marketing Companies (OMCs), Kwaku Agyeman Duah, has intimated that the new tax levies will have an effect on the OMCs.
Speaking in an interview, he revealed that when the tax system is reviewed, it will affect the operations of the oil marketing companies. This, he indicated, will limit the space for OMCs to add their price margin and also not enable them price properly.
“So, for instance, let’s say if taxes come about 60%, it means that I have 40% percent to fix my margin in before I can arrive at a very good price. Now if taxes are increased and it takes about 82 per cent; we will be left with just 18 percent to fix our margins and then price. That limits the OMCs and then it becomes very difficult to price.”
Kwaku Agyeman Duah
Moreover, he disclosed that the group was not expecting government to increase tax on petroleum products.
“We were not expecting that because…impact of the COVID. Rather, we thought maybe there would be reliefs; general reliefs, tax reliefs for businesses and also for individuals.
“But this [increase of tax on fuel products] came as something we were not expecting.”
Kwaku Agyeman Duah
Speaking on when the levies will take effect, he noted that this will be take place after the approval. And also the implementation of the said levy in the budget by Parliament.
“If it’s approved and accepted by the President, we will be informed to start taking the money from the public…GRA will also be alerted to start.”
Kwaku Agyeman Duah
Issues With The Taxes
Also, Mr Agyeman Duah posited that, the group has issues with the taxes. This, he says, is as a result of leakages with regards to the illegal means through which fuel enters the country.
“Another thing is that, we have an issue with the taxes. In terms of the fact that, we have been collecting taxes for the government and one of the things we have noticed is that, there are a lot of leakages. Because, day in day out, we realize that there a lot of illegal fuel coming into the country.”
Kwaku Agyeman Duah
Explaining why this is an issue with regards to taxes, he intimated, there will be an issue of unfairness. He said authorized people will be paying taxes whereas illegal seller will be selling these fuels tax-free.
He said the blocking of the illegal routes and channels, despite the assurance by the interior minister to see to its end, is still ongoing.
“It is beyond NPA, it requires all of us: the authorities, the agencies, politicians, leaders amongst others.”
Furthermore, he revealed that if the irregular ports are not checked and stopped after the tax implementation; there will be variation in prices which will not be ideal for the sector.
Budget and the levies
In the 2021 Budget Statement, the government proposed the introduction of two levies, resulting in a 5.7% increment on petroleum prices at the pump.
Presenting the 2021 Budget in Parliament on Friday, 12 March, Mr Osei Kyei-Mensah-Bonsu said that on the basis of existing world crude oil prices; the implementation of the two proposed levies for sanitation and pollution as well as to pay for excess capacity charges would result in a 5.7% increase in petroleum prices at the pump.
He said government is proposing a Sanitation and Pollution Levy of 10 pesewas and an Energy Levy of 20 pessewas. This will be on the price per litre of petrol/diesel under the Energy Sector Levies Act (ESLA).
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