Finance Minister Dr. Cassiel Ato Forson has announced that Ghana plans to collaborate with the International Monetary Fund (IMF) to eliminate certain taxes, including the Electronic Transaction Levy (e-levy) and the betting tax. He described these taxes as "nuisance taxes" and expressed the government's intention to remove them in the upcoming budget.
The e-levy, introduced in 2022, imposes a 1.5% charge on electronic transactions exceeding a daily threshold. The betting tax, implemented in August 2023, levies a 10% withholding tax on gross winnings from betting, gaming, and lotteries. Both taxes have faced criticism for their regressive nature and the burden they place on lower-income individuals.
However, some experts caution that removing these taxes could impact Ghana's fiscal commitments under the IMF program. Dr. Gideon Boako, a former government official, warned that abolishing the e-levy and betting tax without introducing alternative revenue measures might violate the terms of the IMF agreement. He emphasized the need for explicit plans to offset the revenue shortfall to maintain fiscal discipline.
In response, Dr. Forson has indicated that the government is exploring alternative revenue sources to compensate for the potential loss from these taxes. He emphasized the importance of aligning the tax policy changes with the broader objectives of the IMF program, ensuring that any adjustments do not undermine fiscal stability.
The IMF is expected to conduct a review of Ghana's economic performance and the 2025 Budget in the coming months. This review will assess the government's fiscal policies and their alignment with the IMF program's objectives, including revenue mobilization and debt sustainability.
The government's proposed tax reforms reflect a broader effort to create a more equitable tax system and alleviate economic pressures on vulnerable populations. However, careful consideration is necessary to balance these objectives with the need to maintain fiscal discipline and adhere to international agreements.
By: Isaac Fiifi Klotey Mensah