A policy think tank has urged the government to adopt a product-specific tax reduction strategy to cushion the impact of rising petroleum prices, warning that uniform tax cuts could strain public finances without effectively addressing consumer needs.
The Center for Environmental Management and Sustainable Energy (CEMSE) in a press statement issued on April 14 2026, proposed a balanced tax cut approach in response to the recent surge in fuel prices in Ghana, driven by global geopolitical tensions.
According to the group, “diesel prices have risen by 63% between February and April, while petrol and liquefied petroleum gas (LPG) increased by 36% and 18% respectively, placing pressure on households and businesses”
The price hikes have sparked concerns among commercial transport operators, who are pushing for fare increases, and economists who warn of rising inflation and broader economic instability.
In response, the government introduced tax cuts on petroleum products. However, CEMSE argues that the current approach lacks clarity and fails to account for differences in pricing and consumption patterns across fuel types. The group cautions that a blanket tax reduction could weaken fiscal stability without delivering meaningful relief.
Instead, CEMSE recommends a differentiated strategy, proposing a GHC 0.50 per litre tax cut on petrol and a higher GHC 1.00 per litre reduction on diesel. The organization also suggests a temporary relaxation of the Cylinder Recirculation Margin to further ease costs.
The proposed measures are expected to result in a monthly revenue loss of about GHC 422 million. To offset this, CEMSE advises the government to tap into windfall gains from the upstream petroleum sector and utilize surplus funds from the Unified Petroleum Price Fund.
According to the group, “these measures could bridge the revenue gap in the short term while maintaining fiscal discipline”
CEMSE concludes that, adopting a targeted, product-specific tax policy would provide more effective relief to consumers and help stabilize the economy without compromising government revenue sustainability.
By Coffie Mawuedem Noel
