Stop Increasing Taxes; Introduce Pragmatic Policies to Tackle Challenges in the Energy Sector – IERPP to Government

The Institute of Economic Research and Public Policy, IERPP, has charged the Mahama administration to rather introduce pragmatic policies to tackle the challenges faced in the energy sector instead of the introduction of a GHC1 tax on a litre of fuel purchased.

In a position note shared with various media organizations, news outlets and platforms, the policy think tank expressed the following sentiments;

1. On the 3rd of May 2025, Ghanaians were slapped with an upward adjustment of electricity tarrifs by 14.75% by President John Mahama and his NDC government. One of the reasons for this unfortunate increase was to help solve the challenges in the energy sector. Much as we may have protested, we ended up paying!

2. Today, 4th June, 2025, Ghanaians have once again been slapped in the face with a tax of 1 ghc per litre of fuel. Given that a litre currently sells for approximately 12.40ghc, this translates to about 8 percent increase in fuel prices. Now this is something Ghanaians shouldn’t take lightly. Why?

3. Unlike the MoMo tax (elevy), one could easily avoid paying given that you only pay when you send money via MoMo. Any transaction that did not involve such platforms would have been excluded from paying. However, tax on fuel is not the opposite. It tends to burden the poor more than the rich. Whichever way you look at it, it will push people down the poverty line, and reverse the gains we have made so far within the last years.

4. For people considered to have lower income levels, the 1ghc tax raised on fuel means that they will have to spend more money on fuel as a proportion of their disposable income compared to people of higher income earners. And that is, if they have their own car. The flip side is, there’s the likelihood of and upward adjustment of public transportation fares should global fuel prices rise (something with a great certainty), given how volatile global oil markets are!

5. Now, what is worrying about this whole tax is the fact that Ghanaians are not paying for efficiency, but rather, the incompetence of President John Mahama’s government. What is required from this government are policies that would tackle challenges in the energy sector right from the generation stage to the transmission, distribution and collection, to avoid significant losses of money. Can the President tell us of one such policy to that effect?

6. So what happens if the challenges in the energy sector linger? Will Ghanaians be asked to pay more? Clearly, the energy minister has failed and must either resign or forced to do so!

7. The Finance Minister, Cassiel Ato Forson, at his vetting at the Appointments Committee, was emphatic that increasing revenues is not necessarily about increasing taxes. What has been introduced is an increase in taxation. Ghanaians have been untreated fairly. This government has been dishonest with the Ghanaian populace.