The Illusion Of Tax Relief And The Gh₵1 Energy Levy -A Burden Masquerading As A Solution

In January 2025, when the current government, the National Democratic Congress under President John Dramani Mahama, assumed power, it did so on the strength of promises centered on economic relief, progressive reforms, equity, and smarter governance. Among the key pledges was the abolition of taxes widely viewed as burdensome and regressive. The removal of the Electronic Transfer Levy, the 10 percent betting tax, the Emissions Levy, and the VAT on motor vehicle insurance were received as a sign that the government was attuned to the frustrations of ordinary Ghanaians.

Yet, before the initial excitement could settle, a closer look at the numbers and outcomes painted a more sobering picture. The actual fiscal relief from these repeals turned out to be far less significant than many had anticipated. The E-Levy and the COVID-19 levy, for instance, together generated about 3.26 billion Ghana cedis in 2023, roughly 2.4 percent of total domestic revenue. Though high-profile and media-grabbing, the removal of these taxes had only a marginal effect on household incomes. For many in the informal sector, especially the poor, digital transactions had already declined prior to the repeal. Consequently, the real financial relief felt by most Ghanaians was minimal.

More troubling, however, is how the government chose to make up for the revenue gap. Rather than tightening spending or investing in broader economic expansion, new levies were introduced and expiring ones were extended. The Growth and Sustainability Levy, for example, was increased from 1 percent to 3 percent on the gross production of mining companies. While this might seem targeted at large corporations, the ripple effects on jobs, local economies, and commodity pricing cannot be ignored. The Special Import Levy and VAT on non-life insurance, both of which were expected to lapse, were extended to 2028. These are indirect taxes that inevitably trickle down to the consumer.

The consolidation of energy-related levies, such as the Energy Debt Recovery Levy and the Sanitation and Pollution Levy, under the justification of streamlining energy sector revenue, only ensures that ordinary citizens will continue paying for past policy failures. The reality is that the government did not remove the burden but merely shifted its form. Some taxes were lifted with one hand while others, often more punishing, were introduced with the other. Among the most striking of these is the GH₵1 per litre Energy Sector Recovery Levy, passed under a certificate of urgency in June 2025.

At a glance, one cedi per litre might not seem excessive. But consider the math. Buying 10 litres of fuel now means paying an extra 10 cedis in tax alone. A full tank of 40 litres comes with a 40-cedi tax burden. For someone who consumes 90 litres a week, that’s 90 cedis weekly, over 350 cedis monthly, and more than 4,000 cedis annually. For many Ghanaians, that is nearly a full month's salary.

What is more unsettling is the way this levy has been presented to the public. Government officials argue that pump prices will remain stable due to favourable global oil prices or cedi appreciation. But this is a misleading claim. Even if pump prices do not rise immediately, the tax is still being collected. The cost is real. It just does not show up as a sudden hike, making it an invisible deduction from people’s earnings.

This tactic is not fiscal wisdom; it is a clever disguise. It hides the tax under complex pricing mechanisms, amounting to a form of concealed taxation. Citizens are told it is for their benefit, even as it quietly drains their wallets. Meanwhile, public sector salaries remain largely stagnant. The modest or symbolic increments in wages do little to counter the rising costs driven by these new levies. Government workers are seeing their real income shrink while their financial responsibilities expand.

There is also a troubling narrative being pushed, suggesting that the levy targets fuel importers and not individuals. This is a dangerous illusion. Businesses do not absorb taxes, they pass them on. Every trotro fare, delivery cost, or market item that relies on transportation will ultimately reflect this tax. The ones who suffer most are low-income earners who depend on public transportation and whose incomes are not indexed to inflation.

Let us also talk frankly about wages. Many civil servants, teachers, and nurses continue to earn salaries that have not kept pace with inflation, despite government claims of increments. A salary of 2,000 cedis today stretches far less as much as it did just two or three years ago. A situation for which we once held the previous administration accountable. The prices of food, rent, transportation, and education have not seen any meaningful decline and may even rise further, regardless of the government’s assertions that the cedi has gained strength against the dollar and that fuel prices at the pump have dropped. Yet, these same workers are expected to shoulder the burden of indirect taxation, even as the energy minister casually assures the public that the new levy “will not affect the pump price.”

This pattern reveals a deeper issue: the growing reliance on taxation as the primary tool for raising revenue. It is the path of least resistance and indicates a reluctance to build a more productive and efficient economy. Each new tax chips away at the hopes of citizens who once believed that change would bring real relief.

And this could only be the beginning. With the GH₵1 levy already in place, any rise in global oil prices or depreciation of the cedi will lead to even higher fuel costs, while the levy remains unchanged. This would be a double blow: inflation on one side, stagnant wages on the other, and a mounting tax burden in between.

We must not delude ourselves. Repealing a tax only to replace it with another, more regressive one is not reform. It is substitution. It is rebranding hardship with new language and packaging, but the weight remains, firmly resting on the shoulders of struggling citizens.

This is not a rejection of taxation itself. Taxes are vital for national development. But they must be fair, transparent, and equitable. More importantly, they must deliver tangible benefits. If Ghanaians are asked to pay more, they should see better roads, functioning hospitals, quality schools, clean water, and reliable public services. These are not luxuries, they are the rightful returns on civic responsibility.

Until then, we must recognize what is unfolding as a failure of vision. Leadership cannot appear only when it is time to collect. It must also respond when citizens cry out for equity and fairness.

Ghana does not lack the means to thrive. What it needs is the courage to treat its people as full partners in development, not just as taxpayers, but as stakeholders. The fuel levy is more than just a cedi. It is a signal. If we do not speak up and hold our leaders accountable, the real price will not just be at the pump. It will be paid in lost trust, eroded faith, and stunted national progress.

Let us not just endure the pain. Let us understand it. And let us rise above it.

By Victor Raul Puobabangna Plance, Eggu, Upper West Region

#Puobabangna
#MoreThanJustOneCedi
#SpeakTruthToPower
#GhanaDeservesBetter

   Comments0