Ghana’s new government has abolished several COVID-era taxes, including levies on mobile transfers and vehicle insurance, to alleviate economic hardship. The government seeks alternative revenue methods and aims to improve financial conditions for citizens amid significant fiscal challenges. Plans are also in place to establish the Ghana Gold Board for better management of the gold sector as part of broader tax reforms.
Ghana’s new administration has repealed several tax measures established during the pandemic, primarily aimed at fulfilling International Monetary Fund (IMF) conditions. This decision was made public by Finance Minister Cassiel Ato Forson while presenting the 2025 budget, particularly highlighting five taxes, including a one-percent levy on mobile money transfers and a value-added tax on vehicle insurance, as “nuisance levies” that burden citizens.
These tax cancellations arise amid the country’s economic distress, exacerbated by prior debt mismanagement and revenue shortfalls, igniting concerns about potential fiscal gaps. The government’s strategy aims to alleviate the financial strain on citizens dealing with high inflation and a depreciating currency, alongside plans to institute alternative tax measures for enhanced revenue collection.
Forson articulated that removing these taxes would relieve households and improve disposable incomes, attended by the hope of bolstering business growth. Other scrapped taxes included a 10-percent lottery tax, an emissions levy on vehicles, and a 1.5-percent tax on unprocessed gold by small-scale miners. These levies were implemented as part of the preceding government’s strategy to secure a $3 billion IMF bailout, which was ultimately achieved in 2023.
With the change in leadership to President John Mahama, Forson affirmed that the government had “stopped the bleeding” of the economy. They are also amending the Revenue Administration Act to enhance tax revenue, projecting an additional yield of 0.3 percent of GDP. Furthermore, the administration is focusing on improving road toll collection as part of its infrastructure initiative named “Big Push”.
The tax reductions coincide with an ongoing economic crisis that necessitated seeking IMF support. Forson responded to the fiscal challenges, mentioning severe issues such as mounting debts, financial inconsistencies in the energy sector, and risks originating from cocoa and financial sectors. Economist Daniel Amateye Anim-Prempeh commended the tax eliminations, emphasizing potential benefits for both businesses and citizens, yet warned that success hinges on effective revenue generation strategies without risking further fiscal deficits.
In addition, the government is establishing the Ghana Gold Board to regulate the gold sector, aiming to bolster foreign exchange reserves and stabilize the local currency. The surge in illegal mining, or galamsey, driven by high gold prices, poses significant environmental challenges as more workers are lured into this area.
Ghana’s government has taken decisive steps to revoke several pandemic-related taxes perceived as burdensome, aiming to improve economic conditions for citizens amid ongoing fiscal challenges. By focusing on tax reforms, the administration hopes to enhance revenue collection while supporting local businesses. The establishment of the Ghana Gold Board also highlights a strategic effort to stabilize the economy through better regulation of the lucrative gold sector. Success depends on the government’s ability to manage these changes effectively while avoiding further deficits.
Original Source: www.sanfordherald.com
