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23.02.2005 Press Review

Minority Press Release on petroleum price increase

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Ladies and Gentlemen of the Press, we invite you this morning to express the Minority position on the Customs and Excise (Petroleum Taxes and Petroleum Related Levies) Bill, which was introduced into Parliament yesterday. It will be recalled that the NPP Government increased the price of petroleum products on Friday, the 18th February 2005.

Inclusive in this petroleum price hike were hefty increases in various taxes and levies for various purposes.

The 1st paragraph of the memorandum to the said Bill stated: “The purpose of this bill is to revise duties, taxes and levies on specified petroleum products”. Paragraphs 3,6,9 and 10 of the memorandum to the Bill states: “PARAGRAPH 3: Clause 4 of the Bill increases the exploration levy from ¢3 to ¢10 per litre. The exploration levy is a major source of funding for GNPC's activities including exploration of crude oil in the country. The current exploration levy of ¢3 per litre currently translates into an annual average of 6 billion cedis which is inadequate given GNPC's annual budget of ¢49 billion for 2005.


Clause 5 increases the road fund levy from ¢400 to ¢600 per litre. The road fund levy was instituted to generate adequate and sustainable source of funding for road maintenance in the country. The fuel levy is the main funding source and contributes over 90% to the Road Fund.


In order to sustain Government's commitment to develop infrastructure and maintain the road network an immediate increase in the levy by ¢200 per litre (an equivalent of about 2.0 US cents per litre) is therefore proposed to bring it to ¢600 per litre (an equivalent of 6.5 US cents per litre). Subsequent increases in the levy will be required to bring it to a level that will ensure sustainable funding for road maintenance.


Clause 6 deals with the cross-subsidisation levy. A cross-subsidisation levy is to be introduced as a tax on premium gasoline to finance the subsidies on other products as stated in the schedule 3. Under the new petroleum pricing formula there will be no cross-subsidisation at the ex-refinery level. Rather government taxes on specific products will be varied to ensure the appropriate level of subsidies.


A new deregulation mitigating levy is introduced in clause 7 and specified in Schedule 7. This is imposed to generate revenue to mitigate the impact of the upward price adjustment of petroleum products on the general public, especially the poor and the vulnerable in society. Detailed mitigating measures will be provided in the 2005 national budget.” Ladies and Gentlemen of the Press; Article 174(1) of the 1992 Constitution clearly states that: “No taxation shall be imposed otherwise than by or under the authority of an Act of Parliament.”

Article 107(b) of the constitution also states: “Parliament shall have no power to pass any law which operates retrospectively to impose any limitations on or to adversely affects the personal rights and liberties of any person or to impose a burden, obligation or liability on any person except in the case of a law enacted under articles 178 to 182 of this Constitution. Now, it is clear from the above that taxation is not one of the areas where Parliament can pass retroactive legislation. In other words the NPP Government has no power to introduce a bill to impose a taxation/levy, which has retroactive effect.

The Government by its actions is in clear breach of the constitution. An increase in the various levies and taxes on petroleum products was effected by the announced fuel price increases of 18th February 2005. Government has subsequently introduced legislation on the 22nd February to give retrospective effect to its action of 18th February 2005.

Ladies and Gentlemen of the Press, The NPP Government gets more and more brazen in its lack of respect for the constitution. Such continued lack of respect and infractions of our constitution hold the potential to derail the principle of constitutional democracy and good governance.

Ladies and Gentlemen of the Press, We wish to recall that on the 7th January 2005 the President took the following oath: “ I John Agyekum Kufuor having been elected to the high office of President of the Republic of Ghana do (in the name of the Almighty God swear) (solemnly affirm) that I will be faithful and true to the Republic of Ghana; that I will at all times preserve, protect and defend the Constitution of the Republic of Ghana; and that I dedicate myself to the service and well-being of the people of the Republic of Ghana and to do right to all manner of persons. I further (solemnly swear) (solemnly affirm) that should I at any time break this oath of office I shall submit myself to the laws of the Republic of Ghana and suffer the penalty for it. (So help me God).” The Ministers also took the following oath: “I (Minister's name) having been appointed Minister of State (Deputy Minister) of the Republic of Ghana, do (in the name of the Almighty God swear) (solemnly affirm) that I will at all times well and truly serve the Republic of Ghana in the office of Minister of State (Deputy Minister); that I will uphold, preserve, protect and defend the Constitution of the Republic of Ghana as by law established; that I will, to the best of my judgement, at all times when required, freely give my counsel and advice for the good management of the public affairs of the Republic of Ghana; and that I will not directly or indirectly reveal any matters that shall come to my knowledge in the discharge of my duties and committed to my secrecy as Minister of State (Deputy Minister). (So help me God).” Clearly the President and his Cabinet are in breach of these solemn oaths they freely and willingly subscribed to. Ladies and Gentlemen; This is not the first time the NPP Government has breached our constitution in this manner with impunity. It will be recalled that in 2003, the NPP Government did a similar thing by increasing the road fund levy without introducing the appropriate legislation in the Parliament. When the then Minority Chief Whip Doe Adjahoe raised the unconstitutionality of their action at the time, Government claimed that the levy was being paid into an escrow Account at bank of Ghana. As in this particular case Government subsequently, brought a Bill to the House to amend the law.

Again in 2001, the NPP allowed the importation of right-hand drive buses in contravention of the existing law. It was only upon pressure from the minority and sections of the media that they brought legislation amending the law to give authority to the Minister of Transport to grant waivers based on the minister's sole and arbitrary discretion.

Ladies and Gentlemen: It is obvious therefore that the NPP Government is clearly aware of its responsibility under the constitution in respect of imposition of taxes and yet recklessly disregards to abide by it.

We note also the lack of transparency in the new fuel price increases announced on the 18th February 2005. The recently announced petroleum price fails to provide Ghanaians with an indication of what constitutes the price build-up to the point of the ex-refinery price. This clearly hides from public scrutiny any inefficiency in crude procurement, handling and refining that is being passed on to the Ghanaian consumer.

We are shocked at the insensitivity of the NPP Government in inflicting such hefty increases in petroleum prices and thereby worsening the precarious plight of the average Ghanaian family and the mass of unemployed youth.

The timing of this increase at a time when unemployment is spiraling out of control and the various city authorities are callously evicting so-called hawkers without any well-thought out alternative employment programme is the mark of a Government that has lost all sense of coordination.

A strange new levy described as a 'deregulation mitigating levy' of almost ¢2000 per gallon has been included in the recent price hike. This levy is not only inappropriate but also counterproductive. It is the strangest of logic comprehensible only to the NPP to increase the price of fuel by an upward adjustment of levies and taxes and then go further to impose a new levy to raise funds to mitigate the effect of the increase in fuel prices – STRANGE isn't it?

Ladies and Gentlemen: We in the Minority cannot be part of this unconstitutionality. To do so will be to break the oath we swore to the people of Ghana and thereby condone illegality. This unconstitutionality undermines the principle of good governance so frequently espoused by President Kufour. This has reduced the whole concept of good governance to mere sloganeering.

In the light of the above, we the Minority in Parliament were left with only the painful option of withdrawing from the chamber when the Customs Excise (Petroleum Taxes and Petroleum Related Levies) Bill was being taken in the House this afternoon. We count on you to explain our principled position to the good people of Ghana.

We call on Government to immediately halt collection of the illegal levies and taxes and declare the amount collected so far to enable the people of Ghana decide how it should be utilized.


23 February 2005

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