Parliament Scraps COVID-19 Levy, Injects GH₵3.7 Billion into Economy
Accra, 26 November 2025 – Parliament has officially repealed the COVID-19 Health Recovery Levy, a move expected to save Ghanaians approximately GH₵3.7 billion in 2026 and provide relief to both consumers and businesses. The decision forms part of broader tax reforms outlined in the 2026 budget.
Background of the Levy
The COVID-19 Health Recovery Levy was first introduced in 2021 as part of emergency fiscal measures to help the government fund pandemic-related healthcare responses. The levy added roughly 1% to the value-added tax (VAT) base on goods and services.
While it was effective in raising revenue during the peak of the pandemic, critics argued that its continuation had become a burden on both consumers and small businesses.
Key Details of the Repeal
- Repeal Date: 26 November 2025
- Savings to Citizens: GH₵3.7 billion in 2026
- VAT Adjustments: Effective VAT rate reduced from 21.9% to 20%
- VAT Threshold: Registration threshold for businesses increased from GH₵200,000 to GH₵750,000
According to Finance Minister Cassiel Ato Forson, the repeal of the levy, coupled with VAT reforms, is aimed at stimulating economic activity, easing business operations for SMEs, and enhancing the purchasing power of citizens.
Implications for Ghanaians
For Consumers:
The removal of the levy is expected to reduce the cost of goods and services marginally, helping households stretch their income further.
For Small and Medium Enterprises (SMEs):
By increasing the VAT registration threshold, fewer small businesses will be subject to VAT compliance, reducing administrative costs and allowing them to focus more on growth and job creation.
For the Economy:
The government anticipates that this measure will boost demand, improve liquidity, and support broader economic recovery initiatives post-pandemic.
Broader Tax Reform Context
The repeal is part of a wider tax reform agenda designed to:
- Simplify the VAT system by decoupling other levies such as NHIL and GETFund from the VAT base.
- Promote fairness in taxation by reducing the burden on low-income consumers and small businesses.
- Encourage investment by creating a more business-friendly environment.
Expert Opinions
Economists have welcomed the move, noting that it could increase disposable income for households and enhance competitiveness for SMEs. However, some caution that government revenue may experience short-term reductions, making careful fiscal management crucial.
Mr. Kwame Mensah, an economic analyst, said:
“While removing the levy is a relief for the average Ghanaian, the government must ensure that alternative revenue sources are efficiently managed to avoid creating fiscal gaps.”
Looking Ahead
With the repeal of the COVID-19 levy and accompanying VAT reforms, Ghana enters a new phase of post-pandemic economic recovery. The government is expected to closely monitor the impact on consumer spending, business growth, and overall revenue collection to ensure that the reforms yield the intended benefits.