Ghana's Tax Reforms: A Delicate Balance Between Relief and Revenue

Ghana's government has taken a bold step to ease economic hardship by removing several taxes introduced during the COVID-19 era. The decision, outlined in the 2025 budget, aims to provide financial relief to citizens and businesses struggling with rising inflation and currency depreciation.



The eliminated taxes, labeled as "nuisance taxes," include a 1% levy on mobile money transactions, a value-added tax (VAT) on motor vehicle insurance, a 10% tax on lottery winnings, an emissions levy on vehicles and industries, and a 1.5% tax on unprocessed gold from small-scale miners.


Finance Minister Cassiel Ato Forson assured lawmakers that alternative strategies are being developed to enhance tax collection without increasing the fiscal burden on citizens. The government plans to amend the Revenue Administration Act to generate additional revenue, amounting to 0.3% of GDP.


To compensate for the lost revenue, the government will reinstate road tolls this year as part of an infrastructure development initiative, the "Big Push." Additionally, the government is establishing the Ghana Gold Board to regulate and oversee the gold sector, aiming to increase foreign exchange reserves and curb illegal mining.


Economists have welcomed the removal of the levies, arguing that they will provide much-needed relief for citizens and businesses. However, they caution that the effectiveness of these measures depends on the government's ability to improve tax compliance without widening the fiscal deficit.


As Ghana navigates its economic challenges, the government's tax reforms will be closely watched. The delicate balance between providing relief and generating revenue will be crucial in determining the success of these measures.

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