Accra: Ghana is poised to experience a significant monthly revenue loss of GHS422 million due to fuel tax cuts, according to the Centre for Environmental Management and Sustainable Energy (CEMSE). The organisation has urged the government to consider a more balanced and targeted approach to tax reductions on petroleum products as the country contends with escalating fuel prices attributed to global market tensions.
According to Ghana Web, CEMSE's policy proposal highlighted a steep rise in fuel prices between February and April 2026, fueled in part by geopolitical developments involving Iran and its allies. During this period, diesel prices soared by 63 percent, increasing from GHS10.47 to GHS17.10 per litre, while petrol and liquefied petroleum gas (LPG) saw increases of 36 percent and 18 percent, respectively. The price hikes have raised concerns across various sectors, particularly among commercial transport operators, who are advocating for fare adjustments. Analysts caution that continued price increases could exacerbate inflation and jeopardize macroeconomic stability.
The think tank has criticized the government's current tax relief measures, describing them as lacking clarity and structure. They argue that uniform tax cuts may not effectively address the differing price dynamics of various petroleum products. Instead, CEMSE recommends implementing a product-specific tax regime, proposing a GHS0.50 per litre reduction in petrol and a GHS1.00 per litre cut in diesel. This targeted approach, they believe, would better reflect consumption patterns and decrease market distortions. The proposal also suggests temporarily relaxing the Cylinder Recirculation Margin to further ease pressure on LPG consumers.
The analysis indicates that the proposed tax cuts could result in a monthly revenue loss of about GHS422 million. This includes GHS142 million from petrol and GHS253 million from diesel, along with additional losses from adjustments to LPG-related margins. To mitigate the potential revenue shortfall, the organisation suggests leveraging windfall revenues from Ghana's upstream petroleum sector and surplus funds from the Unified Petroleum Price Fund (UPPF).
While emphasizing the necessity of consumer relief, CEMSE stresses the importance of maintaining fiscal discipline. They argue that a targeted tax approach could provide immediate relief to consumers while safeguarding government revenue and economic stability. The group concludes that adopting a differentiated tax strategy for petroleum products would better equip Ghana to manage fuel price shocks without compromising long-term fiscal sustainability.