By: Ibrahim Asare
Introduction
As stated in Articles 179 and 180 of the 1992 Constitution of the Republic of Ghana, the Executive is required to present an account of the management of the economy for 2024 and a budget statement for 2025 financial year to the Legislature for approval. The Budget Statement and Economic Policy of the government for the remaining nine months in 2025 was presented by the executive on 11th March 2025. The budget statement serves as the Financial Policy of the Government of Ghana which directs the financial and economic activities in the country.
From the budget statement, the government gave account of revenue generated and expenditures made up for 2024 financial year and made projections on revenue to be generated and estimated expenditure to be incurred for the remaining nine months in 2025. Among the projected sources of revenue for the government is taxation. The government has made various proposals on taxation in the budget.
This article is to provide highlights of tax issues raised in the budget statement and proffer my opinion on the tax policies outlined in the budget which can inform authorities in their approach to implementation and legislations formulation.
Highlights of the Tax Issues in the 2025 Budget Statement
Below are highlights of the tax issues in the 2025 budget statement:
Abolition of the 10% WHT on betting winnings.
Betting is affecting the productive workforce of the nation due to bettors expecting to make riches overnight without any productive activities. Betting leads to several social vices including robbery, prostitution, drugs, suicide, alcoholism, and the likes. I believe betting is not a job nor investment but if it’s classified otherwise, then the punters ought to pay taxes in like manner as employees and investors. This tax should have been treated as a sinful tax with an increase of the rate from the 10% to about 50% to prevent the addiction of betting instead of scraping the tax entirely.
Abolition of the Electronic Transfer Levy (E-Levy) of 1%.
I believe E-Levy should not have been introduced in the first place but looking at the investment which has gone into the implementation of E-Levy by both the charging entities (Banks and Telcos) and Government, the tax handle should have been maintained with a revision in the rate to say 0.5% or less with a cap of about Gh¢100 per transaction. This will have garnered some respectable revenue for government from widespread usage due to low charge per transaction and the government will still have the benefits of data collection on financial transactions for data mining to rope others into the tax net.
Abolition of the Emission Levy on industries and vehicles: This measure is in order from my opinion because of the tendencies of the tax in raising the cost of manufacturing in Ghana making it difficult for local manufactures to compete with imported goods.
Abolition of the VAT on motor vehicle insurance policy: This measure is in order to encourage the purchase of motor insurance policies especially in a country where given the chance, the greater majority will not invest in insurance to protect life and properties.
Abolition of the 1.5% WHT on sale of unprocessed gold by small-scale miners: I disagree with the decision to abolish this tax because these small-scale miners are mostly not known to the tax system. They mostly do not register to pay tax, do not file returns, and do not pay any income tax, so the introduction of the 1.5% WHT was the only intervention to rope them into the tax net to contribute just 1.5% of their earnings. To scrap this tax is akin to saying work, destroy our environment, and go and “chop” (spend) your money.
Abolition of the 1% COVID-19 Levy on vatable supplies: I believe this measure is in the right direction because of the difficulty to justify why COVID-19 levy is still being paid several years after the end of COVID. This will restore some faith and confidence in authorities that, Government will demand more from its citizens to solve certain problems only when it’s necessary.
Reduction of the percentage of funds earmarked for payments of tax refund from a maximum of 6% to 4%: I do not see any difference this policy will make because the law requires the Commissioner-General (CG) to pay back into the consolidated fund any amount remaining in the Ghana Revenue Authority General Refund Account (GRAGRA) after settling all refunds certified by the CG. So it’s a matter of punishing those who misapply the funds, but it does not constitute some savings made. This measure is likely to impact the ability of taxpayers to receive refunds of their overpaid taxes as this is difficult to achieve even in the current instance where there is more than enough funds in the GRAGRA as compared to the fund being reduced from 6% to 4% of total tax collected.
The newly concluded national minimum wage is to be exempted from payment of PAYE: This is in order to relief minimum wage earners. This will translate in increase in the first tax free band of individuals on their PAYE compliance. This will bring some relief to individual income earners as well.
The Energy Sector Levies Act (ESLA) to be reviewed:
The review will consolidate the Energy Debt Recovery Levy, Energy Sector Recovery Levy (Delta Fund), and Sanitation & Pollution Levy into one levy without increase in the overall rate. This is a positive measure as it reduces the compliance burden from filing and payment of taxes on taxpayers. As it’s explained in the policy, there will be no economic impact on taxpayers in terms of tax liabilities, but the three taxes will be consolidated into one.
The other levies like Road Fund Levy, Energy Fund Levy, Price Stabilisation & Recovery Levy, Public Lighting Levy and National Electrification Levy will remain as it is to support the achievement of their intended objectives.
Growth & Sustainability Levy paid by mining companies is to be increased from 1% to 3% on their gross production: This will impact the mining sector especially where the tax is calculated on gross earnings irrespective of the cost of earning. The government believes this is a way the country can also benefits from the windfall gains happening in the gold industry.
The sunset clause of the Growth & Sustainability Levy paid by mining companies is to be extended up to 2028.
The sunset clause of the Special Import Levy is also to be extended to 2028: This means the period the levy is to be collected has been extended up to 2028.
Road toll to be re-introduced through the use of technology driven solutions: I agree with the re-introduction of the road toll, but I believe the mode of collection chosen is not value for money for Ghana. I believe the government can add the road toll to the cost of road worthy certificate registration and renewal paid at DVLA for vehicles registered in Ghana and payment collected from foreign vehicles entering Ghana at their entry points. This measure will not require any expenditure in technological equipment and all vehicles in Ghana will pay their share instead of only few vehicles which uses roads fitted with toll booths with its nuisance traffic. The government’s proposed approach is not value for money for Ghana. Here is a link to an article on this subject I published for further reading https://thebftonline.com/2025/02/03/resurrecting-the-road-toll-a-proposal-for-an-efficient-collection-mechanism/
Introduction of measures to enhance Non-Tax Revenues (NTR): The use of new legislations, amendments of existing laws and the development of a National NTR Strategic Policy/Framework to boost NTR is a laudable idea which can be leveraged upon to operationalize a regulatory framework for the collection, management and reporting of property rates consistent with the Medium-Term Revenue Strategy (2024-2027) and the Local Government Act. These measures have the potential to raise revenues to support the developmental activities of Metropolitan, Municipals, and District Assemblies (MMDAs).
Embark on aggressive and sustained tax education campaign: The government intends to embark on sustained tax education campaign in the next 2-3 years to improve compliance and tax revenue mobilization especially among SMEs and personal income earners. This is a laudable policy since tax literacy is very low in Ghana which results in low self-compliance so any measures to increase tax literacy will go a long way to support tax administration in Ghana.
Introduction of a quarterly dialogue: The proposed introduction of a quarterly tax dialogue on tax issues among GRA, Ministry of Finance (MoF) and the business community to ensure that issues affecting businesses are addressed promptly is a laudable idea. This is a great initiative for GRA and MoF to get closer to taxpayers and industries to discuss issues affecting taxpayers to boost confidence in our tax administration.
Proposed reforms in VAT regime: This intervention is a welcoming news as tax practitioners and taxpayers have been calling for the overhaul of the VAT regime.
The below activities are expected to be done in the reform implementation:
a) Technical Assistance from the Fiscal Affairs Department of IMF on VAT reforms has been sort with the IMF’s Mission expected to commence work in April 2025. Guidance and recommendations from IMF mission is welcoming since they will bring onboard some perspectives of what has been successful or pitfalls on best practices in other jurisdiction for consideration in our reforms.
b) VAT Reform Task Force to be inaugurated to hold broad consultation with key stakeholders for their inputs. This task force will also bring home grown ideas harnessed from stakeholders in Ghana to ensure a widely acceptable reform.
c) Abolishing of the COVID-19 Levy. This is a welcoming news as I have commented on above.
d) Reversing the decoupling of GETFund and NHIL from the VAT. This is a welcoming news to prevent the cascading effect currently experienced in the VAT formular which results in 0.9% increase in the Effective Tax Rate (ETR) on VAT. The ETR is expected to be reduced from the current 21.9% to relief households and businesses through a reduction in their cost of consumption of vatable supplies.
e) Reversing the VAT flat rate regime. This measure was introduced to simplify the VAT accounting burden for small businesses which cannot afford the services of trained personnel to handle their VAT compliance. I am unsure of the reason for this proposed reversal.
f) Upwardly adjusting the VAT registration threshold to exempt micro and small businesses from the collection of VAT.
I agree with this policy because, currently some businesses which ordinarily wouldn’t have qualified to register for VAT are required to register due to the impact of inflation on the VAT registration threshold. An increase in this threshold will ensure that the right businesses are required to register. I am unsure whether GRA will deregister already registered businesses which will not meet the new threshold.
g) Improving compliance through public education and awareness.
This is my personal selection of all the measure enumerated because no matter what is introduced or abolished, if GRA does not work on compliance, all the laudable ideas will come to nothing. Compliance and enforcement is the game changer. They should help people to comply, and they should enforce the laws on recalcitrant taxpayers.
Conclusion
From my analysis on the tax policies in the budget espoused above, I can conclude that although I am not in agreement with some of the policies, I believe the generality of the tax policies points towards a positive direction with a brighter future for tax administration in Ghana. Authorities are encouraged to keep up with stakeholder consultation to ensure a proper implementation of the policies. For a good policy when not well implemented comes to nothing.
Recommendations
I recommend to government to zero rate the E-levy and require charging entities to submit monthly report of electronic transactions to GRA for GRA to mine the data to widen the tax base. And the government should have a second look at their approach for the re-introduction of the road toll, for their approach will not be value for money and will not eliminate the pitfalls of the toll booths.
This article is my personal and professional opinion as a Tax Practitioner in the discharge of my duties as a GHANAIAN CITIZEN who seeks the success of Ghana, and it is not a representation of the opinion of any institution.
Ibrahim Asare (CA, MCITG, ADTP, BCom, and HND)
ibasare@gmail.com; ibrahim@ibasare.com; @ib_asare;
(The author is a Chartered Tax Practitioner- a Member of ICAG and a Member of the Chartered Institute of Taxation Ghana).
