Government likely to reintroduce subsidies on fuel and utility tariffs – PFM Tax Africa hints

• PFM Tax Africa is hinting that the government could reduce fuel prices in the coming months

• Tax-to-Gross Domestic Product is targeted at 12.9%

• Crude oil is selling on the market today at seventy-five dollars, forty-eight cents ($75.48)

Accounting and Tax firm, PFM Tax Africa, has hinted that the government is likely to reintroduce some subsidies on utilities in the coming months following intense pressure from the public.

In its second assessment of the fiscal economy, PFM Tax Africa is hoping that government cushions consumers against the expected shocks by providing some subsidies for traders.

According to the report, the revenue shortfall in the first quarter may make it difficult for the country to achieve the post-Covid-19 annual tax-to-Gross Domestic Product target of 12.9%, which is far below the 17.5% for sub-Saharan Africa.

“The quarter one 2021 shortfalls may make it difficult to achieve the post-Covid-19 annual tax-to-GDP target of 12.9% — which is far below the more ambitious 17.5% or more ratio for sub-Sahara Africa (SSA). It is also below the 20% or more for middle-income countries (MICs). Indeed, Ghana’s revenue-to-GDP ratio, which includes non-tax revenues and grants, is also below the band of 17.5-to-20% or more for the country’s middle-income countries and other states,” the report said.

However, the tax-to-Gross Domestic Product target of 12.9% is below the 20% for middle-income countries.

The subsidizing, even though could affect the government’s fiscal programme for the year as it will shoot up expenditure and widen the financing deficit, is necessary since that will help to cut cost on product for traders at the pumps.

Meanwhile, crude oil is selling on the market today at seventy-five dollars, forty-eight cents ($75.48) and with the recent pressure on the cedi, price of petroleum products may increase again at the pumps. This could push prices of goods and services up.