Government announces tax tweaks as it targets raising GH¢72.6billion revenue

The government says it is planning to raise at least GH¢72.6 billion in revenues to execute this year’s budget.

The projected amount is more than 31 percent of the revenues collected last year following the devastating effect the pandemic had on the government’s revenue mobilization efforts.

Presenting the 2021 budget statement to Parliament, Osei Kyei-Mensah-Bonsu, Minister of Parliamentary Affairs explained that the country needs to plan beyond the COVID-19 and build its economy.

“Government recognizes that as a result of the impact of COVID-19, times are hard for many of our people. However, it is important that we rebuild and strengthen our public finances to provide the resources to protect the lives and livelihoods of Ghanaians, deliver critical government services and support the transformation of the economy.

It will also ensure fiscal and debt sustainability. We have to do this ourselves as no one will do it for us. Rebuilding our public finances requires us to implement some important fiscal measures to mobilize additional domestic revenue,” he said.

In projecting a 31.7 percent increase over the GH¢55.1bn revenues collected last year, Mr. Kyei Mensah Bonsu revealed a raft of tax policies that are expected to contribute to government’s coffers.

Key among these revenue measures is the proposal to introduce a COVID-19 Health Levy of a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate to support expenditures related to COVID-19.

The Parliamentary Affairs Minister acting in the stead of the Finance Minister also revealed a Sanitation and Pollution Levy (SPL) of 10 pesewas on the price per litre of petrol/diesel under the Energy Sector Levies Act (ESLA).

Having spent about GH¢21 billion on the financial sector clean-up, government announced that it is seeking to impose a five percent financial sector clean-up levy on profit-before-tax of banks to help defray outstanding commitments in the sector.

Expenditure

The caretaker Finance Minister said government is projecting spending in excess of GH¢113 billion on its various projects and programmes.

Last year as the pandemic struck and saw government’s spending shoot up, more than GH¢100 billion was spent on projects and other initiatives.

Providing a breakdown, Mr. Kyei Mensah Bonsu explained that Wages and Salaries are projected to amount to GH¢25.6 billion while an amount of GH¢6 billion has been budgeted for good and services.

Interest Payments on the government’s public debt are projected at GH¢36 billion whereas GH¢11.4 billion is expected to spent on capital expenditure.