Fuel subsidies need clear limits to protect public finances – Tax Analyst warns

By Prince Antwi August 4, 2026

Tax analyst Francis Timore Boi has called on government to develop a clear framework for fuel price interventions, warning that frequent subsidies could put pressure on public finances and eventually lead to the introduction of new taxes to cover rising costs.

His remarks follow government’s decision to grant a GH¢2-per-litre reduction on diesel prices, the second fuel-related intervention announced within four months. The measure is aimed at easing pressure on consumers, preventing possible increases in transport fares and helping to contain inflation.

Speaking on Citi Business News, Mr. Timore Boi said while the intervention may provide immediate relief to consumers, government must establish clear guidelines on when and how it should intervene in the petroleum market.

He suggested the adoption of a rules-based approach tied to international crude oil prices, where government support would only be activated when prices reach a certain threshold.

“Can we limit the number of times or can we set a threshold for government intervention? For example, if crude oil reaches around 120 dollars per barrel, government can then step in to cushion consumers,” he said.

The tax expert cautioned that without a defined policy, transport operators and consumers may begin to expect government to consistently absorb increases in fuel prices, making future adjustments more difficult.

“My principal concern has always been whether this approach is fiscally sustainable and also the expectation it creates,” he added.

Mr. Timore Boi noted that the first fuel intervention introduced in April 2026 came at a time when crude oil prices were around US$101 per barrel. He observed that although global oil prices have since declined to about US$87 per barrel, government has introduced another relief measure.

He questioned how authorities would respond if crude oil prices rise sharply in the future.

“If crude subsequently increases to around 120 dollars per barrel or beyond, will government continue to absorb two cedis per litre, increase the relief, or allow the full cost to be passed on to consumers?” he asked.

The analyst warned that continued fuel subsidies could create significant financial obligations for the state, which may later require additional revenue measures to manage.

Referencing the COVID-19 period, he explained that emergency government spending during that period was later followed by the introduction of the COVID-19 Health Recovery Levy to support public expenditure.

“Repeated interventions accumulate fiscal costs, and those costs may later be presented as justification for introducing a new tax,” he cautioned.

While acknowledging that consumers benefit from lower fuel prices, Mr. Timore Boi stressed the need for government to strike a balance between providing short-term relief and maintaining long-term fiscal stability.

He maintained that without proper limits, temporary fuel support measures could become permanent financial commitments that eventually place the burden on taxpayers.