Ghana’s government has scrapped several taxes related to the IMF bailout to alleviate economic hardships on citizens. Key taxes removed include levies on mobile money transfers and motor vehicle insurance. The government aims to enhance revenue collection and stabilize the economy while creating an environment conducive to business growth.
On Tuesday, Ghana’s new government announced the cancellation of several taxes linked to the International Monetary Fund in response to the economic strain on its citizens. Finance Minister Cassiel Ato Forson identified five taxes, referred to as ‘nuisance levies’, including a one-percent charge on mobile money transfers and VAT on motor vehicle insurance, which will be eliminated from the 2025 budget.
The country is experiencing significant economic distress attributed to poor debt management and financing shortfalls. Officials expressed concerns about potential revenue loss due to these tax removals, but indicated plans to enhance tax collection alternatives to support citizens struggling with high inflation and currency depreciation.
Minister Forson affirmed that repealing these taxes would alleviate household burdens and promote disposable incomes, which, in turn, would foster business growth. The additional levies scrapped include a 10-percent lottery winnings tax, an emission levy, and a 1.5-percent tax on unprocessed gold from small-scale miners.
These taxes were first implemented by the previous administration to secure a $3-billion IMF bailout, achieved in 2023. Forson reassured lawmakers that President John Mahama’s new government has taken actions to stabilize the economy and plans to amend the Revenue Administration Act to enhance tax revenue collection, aiming to gather an additional 0.3 percent of GDP.
In response to ongoing economic challenges, the government is also focusing on improving road toll collection this year under the infrastructure initiative known as the “Big Push”. The removal of the taxes is seen as a necessary step to aid recovery amidst the economic crisis, which has significantly increased Ghana’s debt burden.
The Ghana Gold Board is being established to oversee the gold sector, improve regulation, and enhance foreign exchange reserves, stabilizing the local currency. The rise in illegal mining, or galamsey, poses serious environmental risks as high gold prices draw more individuals into the sector.
The Ghanaian government’s decision to abolish various Covid-related taxes reflects a commitment to easing economic pressures on citizens and stimulating business growth. While concerns about revenue shortfalls persist, the administration’s strategies to bolster tax collection and regulate the gold sector may provide pathways for fiscal stability and economic recovery. Moving forward, the success of these initiatives will depend on the government’s efficiency in managing revenue alongside debt reduction.
Original Source: www.sanfordherald.com
