In a bid to ease economic hardship, the government of Ghana has announced the removal of several taxes introduced during the COVID-19 era to secure International Monetary Fund (IMF) financing.
The decision, outlined in the 2025 budget, aims to provide financial relief to citizens and businesses struggling with rising inflation and currency depreciation.
Finance Minister Cassiel Ato Forson, presenting the budget on Tuesday, stated that five levies labeled as “nuisance taxes” include a one-percent levy on mobile money transactions and a value-added tax (VAT) on motor vehicle insurance.
With Ghana’s economy facing severe financial distress due to debt mismanagement and fiscal shortfalls, the removal of these taxes has raised concerns about how the government will compensate for the resulting revenue loss.
However, Forson assured lawmakers in Accra that alternative strategies are being developed to enhance tax collection without increasing the fiscal burden on citizens.
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“The removal of these taxes will reduce pressure on households, boost disposable income, and promote business expansion,” Forson stated.
Other levies being abolished include a 10-percent tax on lottery winnings, an emissions levy on vehicles and industries, and a 1.5-percent tax on unprocessed gold from small-scale miners.
These taxes were originally introduced by the previous administration as part of Ghana’s $3-billion IMF bailout, secured in 2023.
Economic recovery plans
Despite the tax cuts, the government has outlined measures to strengthen revenue collection. Amendments to the Revenue Administration Act are expected to generate additional revenue, amounting to 0.3 percent of GDP.
Additionally, the government is set to reinstate road tolls this year as part of an infrastructure development initiative, the “Big Push.”
“We inherited an economy in crisis, weighed down by excessive debt and fiscal challenges, including unpaid arrears and financing gaps in the energy and cocoa sectors,” Forson noted.
Economists have welcomed the removal of the levies, arguing that they will provide much-needed relief for citizens and businesses.
“The scrapping of these nuisance taxes will allow people to retain more of their income, helping businesses recover,” economist Daniel Amateye Anim-Prempeh told AFP. However, he cautioned that the effectiveness of these measures depends on the government’s ability to improve tax compliance without widening the fiscal deficit.
As part of broader economic reforms, the government is also establishing the Ghana Gold Board to regulate and oversee the gold sector. The initiative aims to increase foreign exchange reserves and curb illegal mining which has surged due to high gold prices and caused environmental destruction.
Source: Africafeeds.com