Economist and Political Risk Analyst, Dr. Theo Acheampong, has subjected Ghana’s New Vehicle Emissions tax to thorough scrutiny and proposed some amendments that could be made to it.

He recognized that Ghana is the third African country to introduce an explicit carbon tax after South Africa and Mauritius. He was confident that the introduction of the tax would mitigate the harm associated with vehicle emissions even though it has faced stiff opposition from civil society and consumer groups.

In admitting that the Vehicle Emission Tax is necessary, he proposed that the government remove the current sanitation levy because it amounts to double taxation. He encouraged the government to replace the Sanitation and Pollution Levy (SPL) with an actual tailpipe emission test as done in South Africa and many parts of the world and urged the government of the day to get the Driver and Vehicle Licensing Authority (DVLA) to conduct the test during the annual roadworthiness checks.

“Tax bands will be different and tied to tailpipe emissions above a set threshold, e.g. above 120g CO2 per km; it can also include engine capacity. Ghana’s proposed emissions tax for vehicles with up to 3-litre engine capacity is not unreasonable when benchmarked to South Africa’s. Ghana’s charges range from GHS75 (US$6) for motorcycles and tricycles to GHS150 (US$ 12) for motor vehicles, buses and coaches up to 3-litre engines. South Africa’s tax rate ranges from R132 (US$7; GHS86) to R176 (US$9; GHS115) for every gram of carbon dioxide per kilometer above the threshold.”
Dr. Theo Acheampong

Dr. Theo Acheampong advised that the GHS300 (US$24) tax for engines above 3 liters should be revised downwards because it is steep and targets the main means of transport for many citizens per the 2012 Ghana National Transport Household Survey which indicated that 90% of commuters used shared public transport commonly referred to as ‘tro-tro’.

Government’s Motivation For The Emissions Tax

Dr. Acheampong’s statement also highlighted that the country has gotten to a point where it is prudent to initiate measures to control the rate of carbon emission in the country.

He said that the energy sector is the highest contributor to greenhouse emissions (46%). He went on to assert that within this, mobile combustion emissions accounted for 34% of the total energy emissions and 15% of the total national emissions in 2019.

He argued that the tax has also been necessitated by the high levels of transportation emissions, predominantly from road transport, which increased by 47% compared to 2016 levels due to growing vehicle ownership and the associated traffic congestion in cities and peri-urban areas.

“Low respiratory infections, which are linked to air pollution, are among the top five causes of death in the country. Some 28,000 Ghanaians died prematurely from air pollution in 2020. Air pollution-related deaths cost Ghana 0.95% of gross domestic product.”
2021 Lancet Study

He alluded that many of the cars on Ghana’s roads fail to meet international emissions standards and recognized the argument by some people that it is due to the use of low-quality fuel in the country. He however regarded it as a more recent development that must be addressed separately, adding that “it does not take away the need to tax vehicular emissions when fuel issues are, at best, minimal”.

Dr. Theo Acheampong finally expressed his hope that the money that will be raised from the emissions levy will be used to address very key environmental issues in the country.

The Ghana Revenue Authority (GRA) on February 1, 2024, announced that the Emissions Levy Act, 2023 (Act 1112) will come into effect the following day. According to the Ghana Revenue Authority (GRA), the Act which imposes a levy on carbon dioxide equivalent emissions from specified sectors and internal combustion engines will limit the emission of greenhouse gases in the country.