Government Increases Tax on Fuel After Ato Forson Submits Request to Parliament

• Finance Minister Dr Cassiel Ato Forson has indicated that Parliament plans to raise taxes on petroleum products
• The minister explained that the increase in taxes on fuel was meant to help clear the US$3.1 billion energy debt
• Forson also said that the new taxes would not lead to fuel prices increases because of the strength of the cedi

Finance Minister Dr Cassiel Ato Forson introduced an Energy Sector Levy Amendment Bill that raised taxes on petroleum products.

This has culminated in an extra GH¢1 tax on every litre of fuel bought.

Forson said the increase in taxes was necessary to clear the alarming US$3.1 billion energy debt as of the end of March 2025.

Forson said the amendment for the increase in taxes was necessary to clear the alarming US$3.1 billion energy debt as of the end of March 2025.

"To help raise additional revenue to fund the needs in the power sector, the government is proposing an increase in the ex-pump price of petrol, diesel and related products."

In Parliament on June 3, he argued that consumers would not immediately feel the impact at the pumps because of the strengthening of the cedi.

"Our simulations suggest that there will be no increase in the ex-pump price of petrol and diesel in the next window beginning today if the levy is imposed. This is because of a strong Ghana Cedi."

The US$3.1 billion debt includes significant arrears owed to Independent Power Producers (IPPs), various State-Owned Enterprises (SOEs), and crucial fuel suppliers.

Commenting on the increase, the Centre for Environmental Management and Sustainable Energy director, Benjamin Nsiah, noted that the inability to pay arrears also contributes to the debt, in addition to inefficiencies on the part of distribution companies.

“Until we address them, we can continuously increase the levies yet we may not be able to defray the debts.”

Parliament eventually approved the Energy Sector Levy (Amendment) Bill, 2025, introducing the GH¢1 levy on petroleum products.

The Minority Caucus opposed the bill, describing it as an inappropriate burden on Ghanaians.

This culminated in a walkout during the approval process.

Before the vote, Majority Leader Mahama Ayariga said this tax increase was a collective sacrifice to end the persistent power crises.

This new tax is expected to generate an additional GH¢5.7 billion in revenue annually to address the energy sector's financial woes.

Energy minister defends increased tax on fuel

The Minister for Energy and Green Transition, John Jinapor, later defended the newly approved GH¢1.00 petroleum levy, saying it is the right time to impose it.

He told Joy News that the government refrained from introducing the levy when it assumed office due to the high cost of petroleum products at the time.

"Fuel was around GH¢16.00, and a sensitive government will not slap a tax when fuel is GH¢16.00. You couldn't have imposed that tax around that time when fuel was still very high, and so you needed to work to bring fuel down to this level and share the gain with Ghanaians.

"At that time, if we had increased it, you can imagine the impact on Ghanaians, but today, the net effect is that you are still having a reduction of GH¢3.00 on a litre of fuel," Jinapor added.

No new taxes in 2025 budget

YEN.com.gh also previously reported that there were no new taxes introduced in the 2025 budget presented to members of Parliament by the Finance Minister, Dr Forson.

The government would focus on improving compliance and expanding the tax base through other means, also removing unpopular taxes from the Akufo-Addo era.

The government subsequently abolished several taxes, including the Electronic Transfer Levy, Betting Tax, and Emissions Tax, following presidential assent to these bills.

Proofreading by Bruce Douglas, copy editor at YEN.com.gh.

Source: YEN.com.gh