Ghana’s government has repealed several Covid-era taxes viewed as burdensome, aiming to ease financial pressures on citizens amidst economic challenges. Key taxes eliminated include those on mobile money transfers and lottery winnings. The government plans to enhance tax collection and has introduced the Ghana Gold Board to stabilize the economy and currency.
On Tuesday, Ghana’s government announced the elimination of several taxes associated with the Covid-19 pandemic, which were introduced to secure International Monetary Fund (IMF) financing. Among the cancelled taxes are a one-percent levy on mobile money transfers, a value-added tax on vehicle insurance, and other levies deemed as “nuisance taxes” by Finance Minister Cassiel Ato Forson during the presentation of the 2025 budget.
The country is currently facing “severe distress” due to debt mismanagement and financing shortfalls. Concerns arose regarding how the government would address the revenue shortfall created by these tax cancellations. The authorities aim to alleviate the financial burden on Ghanaians struggling with high inflation and currency depreciation, stating they will implement alternative measures for improving tax collection.
Minister Forson expressed the intention behind the tax removal, noting, “The removal of these taxes will ease the burden on households and improve their disposable incomes. It will support business growth as well.” Other taxes being abolished include a ten-percent tax on lottery winnings, an emission levy on industries and vehicles, and a 1.5-percent tax on unprocessed gold from small-scale miners.
These taxes were introduced by the preceding government as part of a strategy to secure a $3 billion bailout from the IMF, which was finalized in 2023. Forson reassured parliament that the current administration under President John Mahama was committed to mitigating economic challenges. Plans are underway to amend the Revenue Administration Act to secure improved tax collection, anticipated to increase GDP by 0.3 percent.
In light of the economic crisis that compelled Ghana to seek IMF assistance, Minister Forson described the situation as dire, stating, “We inherited an economy in deep crisis, hard hit with debt and beset by other fiscal challenges.” Economist Daniel Amateye Anim-Prempeh commended the government’s tax cuts, suggesting that these measures will positively affect citizens’ financial situations and the business environment. However, he cautioned that overcoming the fiscal deficit requires successful revenue collection strategies.
Furthermore, the creation of the Ghana Gold Board is intended to regulate the gold sector, increase foreign exchange reserves, and stabilize the local currency amidst rising illegal mining activities, also known as galamsey, which have resulted in significant environmental consequences.
In conclusion, Ghana’s government has made a significant move by abolishing certain Covid-era taxes in an effort to alleviate the financial burden on citizens amid economic distress. This action reflects the administration’s commitment to reform and improve fiscal conditions, although concerns about revenue shortfalls persist. As the government seeks to enhance tax collection and regulate the gold sector, the success of these measures will ultimately depend on effective implementation and management of fiscal policies.
Original Source: www.sanfordherald.com
