Ghana’s government has abolished several taxes introduced during the pandemic, including levies on mobile transfers and lottery winnings, in response to economic hardships. Finance Minister Cassiel Ato Forson emphasized the need for such measures to ease the burden on citizens and stimulate business growth while assuring a consistent approach to tax collection amid ongoing fiscal challenges.
On Tuesday, the government of Ghana announced the elimination of several tax measures, including a one-percent levy on mobile money transfers and a value-added tax on motor vehicle insurance, initially imposed during the pandemic to secure IMF financing. Finance Minister Cassiel Ato Forson, while presenting the 2025 budget, highlighted the necessity of this decision due to economic hardships faced by citizens.
With the economy experiencing significant distress, largely due to debt mismanagement and financing challenges, there are concerns regarding how the government plans to address the resulting revenue gaps. Authorities are committed to supporting Ghanaians facing rising inflation and a declining currency by implementing alternative tax collection measures.
The eliminated taxes also include a 10-percent tax on lottery winnings, an emission levy on certain industries and vehicles, and a 1.5-percent tax on unprocessed gold from small-scale miners, all introduced under the previous administration while pursuing a $3-billion IMF bailout, which was achieved in 2023. Forson asserted that this new government’s actions would alleviate the financial burden on households and stimulate business growth.
Plans are underway to amend the Revenue Administration Act, which is projected to enhance tax revenue collection by an additional 0.3 percent of GDP. Furthermore, the government aims to improve road toll collection as part of a broader infrastructure initiative known as the “Big Push.”
Ghana continues to grapple with the economic crisis that initiated its request for IMF support, leading to substantial debt and other fiscal difficulties. Forson stated, “We inherited an economy in deep crisis, hard hit with debt and beset by other fiscal challenges.”
Economist Daniel Amateye Anim-Prempeh expressed optimism about the tax removals, asserting that they will benefit citizens and assist businesses in recovering. However, he emphasized that the effectiveness of these measures relies on the government’s ability to enhance revenue collection without exacerbating the fiscal deficit.
Additionally, the establishment of the Ghana Gold Board aims to regulate the gold sector, increase foreign exchange reserves, and stabilize the local currency amid rising illegal mining activities, which have contributed to environmental damage.
The Ghanaian government’s elimination of various tax measures is a strategic move aimed at alleviating the economic burden on citizens amid a significant economic crisis. While these changes are designed to stimulate both household disposable income and facilitate business growth, the government’s success will hinge on its ability to enhance tax collection without increasing fiscal deficits. Moreover, the focus on regulating the gold sector underscores the importance of sustainable economic management.
Original Source: www.sanfordherald.com
