In a twist of political irony, the National Democratic Congress (NDC), once a staunch opponent of the Electronic Transfer Levy (E-Levy), has introduced a new GH₵1 per litre fuel levy that far exceeds the burden of the much-criticized E-Levy. This decision contradicts the NDC’s prior position as champions of the ordinary Ghanaian and raises serious questions about fairness, economic justice, and policy consistency.
This article examines the real impact of the new fuel levy, dissects its redundancy given the already existing fuel-related taxes, and argues why its imposition is economically regressive, politically contradictory, and socially unsustainable.
The Reality: Ghanaians Already Paying Over 40% of Fuel Cost in Taxes and Levies
Many Ghanaians may not realize it, but every time they buy a litre of fuel, they are not just paying for the petroleum itself but are also paying more than 40% of that cost to the government through a complex web of taxes, levies, and margins. These charges have quietly but significantly inflated the pump price of fuel, making life harder for consumers long before the latest GH₵1 fuel levy was introduced.
For instance, the Energy Debt Recovery Levy, which takes GH₵0.49 per litre, was introduced to help repay legacy debts from the Tema Oil Refinery (TOR) and other energy sector liabilities. Then there’s the Road Fund Levy, contributing GH₵0.48 per litre, which is intended for road maintenance and infrastructure but its effectiveness remains questionable, given the poor state of many roads across the country.
The Energy Fund Levy, though relatively small at GH₵0.01 per litre, supports the operations of the Energy Commission. The Price Stabilization and Recovery Levy (PSRL), set at GH₵0.16 per litre, was originally meant to shield consumers from volatile fuel prices and subsidize premix and residual fuel oils yet, ironically, this levy remains in place even when fuel prices keep soaring, leaving consumers with no real sense of “stabilization.”
Ghanaians also pay a Sanitation and Pollution Levy of GH₵0.10 per litre, which aims to tackle sanitation issues. However, many citizens continue to live amidst growing waste problems and underwhelming environmental management.
Similarly, the Energy Sector Recovery Levy, at GH₵0.20 per litre, is designed to restructure and recover costs in the energy sector, a sector that continues to suffer from inefficiencies and frequent disruptions.
On top of these levies is the Special Petroleum Tax, costing consumers GH₵0.46 per litre. This tax, introduced under VAT reforms, is explicitly designed to generate revenue for the State but with limited transparency on how that revenue is utilized.
Then, there are operational and logistical margins like the Primary Distribution Margin (GH₵0.11), which covers the cost of moving fuel from coastal depots to inland areas, and the BOST Margin (GH₵0.09), which helps maintain the infrastructure of the Bulk Oil Storage and Transportation company.
Further adding to the cost is the Fuel Marking Margin at GH₵0.05 per litre, which goes toward tracking fuel products to reduce adulteration and tax evasion. Meanwhile, Oil Marketing Companies (OMCs) take GH₵0.46 per litre as their profit margin (called the Marketers’ Margin), and retailers (such as fuel stations) also take their share.
All of these charges cumulatively mean that nearly half of what you pay at the pump isn’t for the fuel itself, but for a tangle of levies and margins, and some of which duplicate each other’s purpose or have failed to deliver their promised benefits.
Against this backdrop, the newly introduced GH₵1 fuel levy by the NDC government is not just a new charge rather it is an excessive addition to an already bloated tax structure. The state is already extracting significant revenue from each litre sold. This begs the question: Why impose an entirely new fuel levy when the existing ones should already be generating billions of cedis annually?
Before asking Ghanaians to bear more burden, the government must first justify the continued existence of each of these older levies, and It must demonstrate that the funds collected have been used effectively and transparently. Without this accountability, any new tax no matter how noble its stated purpose will be viewed as unjust, insensitive, and economically dangerous.
GH₵1 Dumsor Levy: An Unnecessary and Redundant Addition
The justification given for the new levy is to fund development and energy transition initiatives particularly addressing Dumsor. However, the same objectives already exist within current levies:
- Energy Sector Recovery Levy (GH₵0.20) and Energy Debt Recovery Levy (GH₵0.49) were both introduced to address energy-related financing gaps.
- Sanitation Levy (GH₵0.10) addresses environmental concerns also cited in defense of the new fuel tax.
- PSRL (GH₵0.16) exists specifically to stabilize prices yet consumers rarely benefit from such interventions, raising questions of accountability.
The GH₵1 per litre fuel levy is therefore not introducing anything new. Rather, it duplicates existing levies, without offering any new accountability framework or measurable benefit to citizens.
Economic Impact: Direct Cost Comparison of NDC GHS 1 Dumsor Levy with NPP E-Levy
Let’s compare the new GH₵1 Dumsor levy to the previous 1% E-levy.
The E-Levy, introduced under the NPP, applied a 1% charge on electronic financial transactions such as mobile money and bank transfers. Its impact was limited primarily to digital users, that is, individuals who used electronic platforms for sending or receiving money. For those who preferred cash transactions, the levy was completely avoidable.
In contrast, the fuel levy introduced by the NDC imposes a fixed GH₵1 tax on every litre of fuel purchased. This is a blanket tax that affects every Ghanaian, directly or indirectly. Whether you own a car or not, whether you live in the city or in a rural area, this levy touches you because transportation is the backbone of the economy.
Goods, food, public transport, and even electricity (in areas relying on generators) are now going to be extremely more expensive under Mahama’s Dumsor Levy.
The monthly cost difference is staggering. A typical commercial driver using about 30 litres of fuel per day will now pay approximately GH₵900 more each month just from the new levy. In comparison, if that same driver made GH₵2,000 in electronic transfers in a month, his E-Levy charge would have been only GH₵20 which is a tiny fraction.
Moreover, the economic ripple effect of the fuel levy is far more damaging. The E-Levy had minimal inflationary consequences because it targeted digital transfers rather than the physical flow of goods and services. However, the Dumsor levy raises the cost of transportation, which in turn increases the price of nearly all goods and services in the country. It drives up inflation and reduces the purchasing power of ordinary Ghanaians especially the poor masses and working class.
In essence, while the E-Levy was targeted and avoidable, the Dumsor levy is broad, unavoidable, and economically regressive.
Even for those who never use digital services, the Dumsor levy will affect their transport, food prices, electricity (via generators), and general cost of living. A trotro driver using 30 litres a day now pays GH₵30 more daily, which translates to GH₵900 monthly, a burden 45x greater than the average monthly cost of the E-Levy.
Inflationary Pressures on the Poor Masses
Fuel prices influence nearly every sector: food, transportation, manufacturing, agriculture, and logistics. A GH₵1 hike per litre means higher fares, higher food prices, and higher prices on all goods that are transported, and in everything, Inflation hits the poor hardest.
Political Contradiction: The NDC’s Reversal of Its Own Anti-Tax Rhetoric
In opposition, the NDC called the E-Levy “insensitive, anti-poor, and oppressive”, and leading figures of the NDC including Hon. Dr. Ato Forson, current Minister of Finance led nationwide campaigns against the E-levy. In fact, NDC through the influence of John Mahama then Opposition leader created serious difficulties in Parliament regarding the passage of the E-levy Act yet after winning political power has introduced Dumsor Levy of GHS 1 on every litre of fuel which is:
(a) Harder to avoid
(b) More economically damaging
(c) More inflationary
(d) More regressive especially on the poor masses who uses trotro as means of transportation.
By introducing Dumsor levy now, the NDC has committed a strategic and ethical contradiction, one that damages public trust. Ghanaians voted for relief, not reinforced hardship.
Mismanagement and Inefficiency of Existing Levies
Before introducing any new fuel taxes, the government should first account for how existing levies are managed. For example:
- The Price Stabilization and Recovery Levy is rarely used to stabilize prices.
- The Energy Sector Recovery Levy and Energy Debt Recovery Levy continue to exist with no public audit or sunset clause, even though sector restructuring was promised.
- The Road Fund Levy is collected religiously, yet roads remain poor, especially in rural and peri-urban areas.
The lack of transparency and proper utilization of current fuel-related levies undermines the moral authority to impose new ones.
Conclusion: Scrap the Dumsor Levy and Rationalize Existing Ones as Stated in Section 152(Page 43) of 2025 Budget Speech
The introduction of the GH₵1 per litre fuel levy is economically unjustifiable, politically hypocritical, and socially regressive. Ghanaians are already overburdened by an excessive array of fuel-related taxes and levies. What is needed is not more taxation, but:
- A rationalization of existing levies, that is, merging redundant ones and scrapping irrelevant ones.
- Public accountability mechanisms for each fuel-related tax.
- Economic relief policies, not punitive fiscal tools in a time of hardship.
The NDC must choose between governing with empathy and governing with expedience.
If Mahama’s government truly stands with the people especially the already suffering poor masses, it must scrap or suspend this Dumsor levy with immediate effect, restore trust, and begin a transparent dialogue about fuel pricing, addressing Dumsor, and taxation in Ghana.
… Signed….
Razak Kojo Opoku(PhD)
Founding President of UP Tradition Institute
