Ghana Abolishes COVID-Era Taxes to Support Economic Recovery
Ghana’s government has eliminated several COVID-related taxes to ease economic burdens on citizens, including levies on mobile transfers and insurance. Finance Minister Cassiel Ato Forson assured that alternative tax collection measures will be introduced to address revenue shortfalls. The government’s commitment aims to stabilize the economy and enhance disposable incomes amid financial challenges.
Ghana’s newly elected government announced the cancellation of several taxes introduced during the COVID-19 pandemic, which were linked to securing International Monetary Fund (IMF) financing. Finance Minister Cassiel Ato Forson identified five taxes labeled as “nuisance levies,” including a 1% charge on mobile money transfers and a value-added tax on motor vehicle insurance, aimed at alleviating economic distress faced by citizens.
The government’s decision arises amid severe economic difficulties, including debt mismanagement and financing shortfalls. Concerns were raised regarding the potential revenue shortfall resulting from these tax eliminations. Authorities plan to implement alternative strategies to enhance tax collection to offset lost revenue as Ghanaians grapple with high inflation and a declining currency.
Forson conveyed to lawmakers, “The removal of these taxes will ease the burden on households and improve their disposable incomes.” He emphasized that these measures would also foster business growth. Other taxes abolished include a 10% tax on lottery winnings, an emission levy on industries and vehicles, and a 1.5% tax on unprocessed gold from small-scale miners.
These levies were originally enacted by the previous administration in pursuit of a $3 billion IMF bailout, feasible in 2023. Forson expressed confidence that under President John Mahama’s leadership, the government has begun rectifying the economic situation. Plans are underway to amend the Revenue Administration Act to enhance tax collection efforts, potentially adding 0.3% to the GDP.
Moreover, as part of the infrastructure development initiative, referred to as the “Big Push,” the government aims to improve road toll collection this year. The tax revisions occur amid an ongoing economic crisis, with Forson stating, “We inherited an economy in deep crisis, hard hit with debt and beset by other fiscal challenges.”
Economist Daniel Amateye Anim-Prempeh praised the move, asserting that “the removal of these nuisance taxes will put money back into the pockets of citizens and help businesses recover,” although he cautioned that success relies on effective revenue collection without exacerbating the fiscal deficit. Additionally, the government is forming the Ghana Gold Board to regulate the sector and stabilize the local currency amidst challenges posed by illegal mining activities.
In summary, the Ghanaian government has announced the cancellation of various taxes deemed burdensome in an effort to alleviate economic hardships for citizens and encourage business growth. These removals are set against a backdrop of financial difficulties, prompting concerns about potential revenue losses. The administration’s focus will pivot towards refining tax collection to ensure fiscal stability moving forward while addressing the economic challenges inherited from previous administrations.
Original Source: www.sanfordherald.com
