Ghana’s Finance Minister, Dr. Cassiel Ato Forson, announced the abolition of six controversial taxes in the 2025 budget, including the E-Levy and COVID-19 Levy. This decision aligns with the National Democratic Congress’s electoral promises to ease financial burdens on citizens. The government intends to enhance tax compliance and support economic growth while implementing new fiscal measures to offset revenue loss.
Ghana’s Finance Minister, Dr. Cassiel Ato Forson, has announced the government’s decision to eliminate several controversial taxes. In alignment with the National Democratic Congress (NDC) manifesto for the 2024 elections, six taxes categorized as “nuisance” will be scrapped as part of the upcoming 2025 budget. The taxes due for abolition include the Betting Tax, E-Levy, Emissions Levy, VAT on Motor Vehicle Insurance Policies, Tax on Unprocessed Gold from Small-Scale Miners, and the COVID-19 Levy.
In his presentation of the 2025 budget to Parliament, Dr. Forson emphasized that abolishing these taxes is essential for achieving the government’s fiscal objectives for the coming year. He stated that government officials are proposing revenue measures to facilitate the fiscal targets, reinforcing the commitment to fiscal responsibility and economic stability.
The specific taxes being abolished are: 1. Betting Tax: This includes the 10% withholding tax on lottery winnings established in 2023. Dr. Forson confirmed, “We will abolish the 10% withholding tax on winnings from lottery, otherwise known as the ‘Betting Tax.’”
2. E-Levy: Known for its unpopularity, the 1% levy on electronic transaction transfers is also set to be removed. Dr. Forson stated, “We will abolish the Electronic Transfer Levy (E-Levy) of 1%.”
3. Emission Levy: Intended to address environmental concerns, this levy will be eliminated as well. Dr. Forson affirmed, “We will abolish the Emission Levy on industries and vehicles.”
4. VAT on Motor Vehicle Insurance Policies: The VAT imposed on these insurance policies will be revoked. He announced, “We will abolish the VAT on motor vehicle insurance policy.”
5. Tax on Unprocessed Gold from Small-Scale Miners: The 1.5% withholding tax regarding unprocessed gold sales will also cease. Dr. Forson remarked, “We will abolish the 1.5% withholding tax on the winning of unprocessed gold by small-scale miners.”
6. COVID-19 Levy: This levy will be phased out later in the year as part of broader reforms.
Dr. Forson indicated that these tax removals will alleviate financial strain on households, subsequently increasing disposable income and fostering business growth. Additionally, the measures are anticipated to enhance tax compliance nationwide. To mitigate the revenue loss from these abolitions, the government plans to lower the tax refund ceiling from 6% to 4% of total revenue, projected to save GH¢3.8 billion in 2025 alone, sufficient to offset losses from the E-Levy and Betting Tax. Dr. Forson concluded, “This amount is sufficient to cover the revenue shortfall from the removal of the E-Levy, which accounts for GH¢1.9 billion, and the Betting Tax, estimated at GH¢180 million.”
In summary, Ghana’s government is undertaking significant fiscal reforms by abolishing key taxes to support economic growth and improve living standards, demonstrating a commitment to a more favorable business climate while ensuring fiscal prudence.
In conclusion, Ghana’s decision to abolish six contentious taxes reflects a strategic move to enhance economic conditions and support households and businesses. The government’s commitment to achieving fiscal targets while promoting a favorable business environment is evident in these reforms. Through these measures, the Finance Ministry aims not only to ease the tax burden but also to foster compliance and maintain economic stability moving forward.
Original Source: africa.businessinsider.com
