Emissions levy is essentially double taxation – Terkper

Former Finance Minister, Seth Terkper, has raised concerns about the government’s proposed emission levy, calling it essentially double taxation due to its overlap with existing excise duties on imported vehicles.

He argues that the emission tax designed to encourage environmentally friendly vehicles is “punitive” and already covered by the existing excise duty based on engine size and other factors that indirectly reflect emissions.

Speaking in an interview with Joy Business, he warned that this double taxation could lead to increased cases of tax evasion and avoidance.

“I think it’s mistaken to say we don’t have emission tax in the country, particularly concerning vehicles that are embedded in the excise duty. Because if you import a vehicle, the cost includes excise which is graduated based on the age of the vehicle and the capacity of the vehicle”

“If you’re bringing in an old vehicle you get to pay more for a nine-year-old vehicle than two years old brand-new vehicle. That is because the engine is deemed to be weaker, and creates more harm to the economy…it’s an emission, a punitive tax under our excise regime. “

The implementation of the new tax laws and amendments directs the enactment of the Emissions Levy Act, 2023 (Act 1112).

This law imposes a levy of GH¢100 per tonne on carbon dioxide equivalent emissions from the electricity producers, as a statutory incidence.

Already, the Chief Executive Officer of the Chamber of Independent Power Generators, Ghana (IPGG), Dr. Elikplim Kwabla Apetorgbor, has described the Emissions Levy Act, 2023 as a political risk that will increase the cost of power.

According to him, the emissions levy would trigger an increase in electricity tariff.

The Institute of Climate and Environmental Governance (ICEG) also expressed concern about the implementation of the emission levy when there is still a lack of clarity as to the management of the likely revenues this will generate to spur climate transition efforts.

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Source: myjoyonline.com