Mid-Year Budget Review: Government pledges no new taxes; experts push for streamlining

The government says it will not introduce new taxes or a supplementary expenditure in today’s review of the 2024 budget, which will be presented to Parliament.

Rather, implement measures to make Ghana’s tax regime fit for the purpose to engender compliance and increase domestic revenue.

Dr Alex Ampaabeng, a Deputy Finance Minister, said this at the launch of the World Bank’s eighth Ghana Economic Update in Accra on Monday, July 22, indicating that there could be a likely downward revision of expenditure.

The report, themed, “Strengthening domestic revenue systems for fiscal sustainability”, focuses on medium-term economic outlook and potential risks going forward.

It also provides solutions to enhancing macroeconomic management and accelerating progress towards a sustainable and inclusive growth through stimulating stakeholders’ dialogue on economic issues and policy trade-offs.

“The mid-year budget is not bringing any new taxes, and there will not be supplementary budget… in fact, our expenditure, without pre-empting anything, is likely to be revised downwards,” Dr Ampaabeng said.

He said the current economic environment required support to businesses, and echoed government’s commitment to protecting the economy by charting a sustainable fiscal path to make Ghana a gateway and the preferred trade and investment destination in Africa.

Dr Ampaabeng said the Ministry was working actively with the Ghana Revenue Authority (GRA), the country’s revenue mobilisation agency, on data cleansing to identify taxpayers and make them pay appropriate taxes.

“What we’re doing now is to have accurate data on who is doing what. With the digitisation of addresses, linking of Ghana card with bank accounts and businesses, it’s much easier to access taxpayers,” he said.

Meanwhile, some experts have encouraged the government to streamline tax and revenue handles, and ensure a full implementation of policies under the ongoing US$3 billion International Monetary Fund (IMF) loan-supported programme.

Trade, industry, academia, and Ghana’s Diplomatic Corps have also called for long-term national solutions to stabilise Ghana’s economy, including improving efficiency in revenue collection and legislation to cap government borrowings.

Mr Stefano Curto, Lead Economist for Ghana, Liberia, and Sierra Leone, at the World Bank, stated that Ghana’s macroeconomic situation had improved considerably over the past year.

“However, the sustainability of these efforts hinge on a fundamental aspect – enhancing the country’s tax revenue while minimising the impact on growth and the poor and most vulnerable,” he noted.

In an interview with the Ghana News Agency, Mr Abeku Gyan-Quansah, Director, Tax Services, PricewaterhouseCoopers, urged that tax and revenue laws be implemented effectively, while making payment friendlier to businesses.

“If you introduce a law which will virtually kill somebody’s business, that person will either not do that business at all and you don’t get the money, or the person will do the business and find ways around the tax that you’ve introduced,” he said.

“The Value Added Tax (TAX) is troubling; why should we have a law with six different rates?” He quizzed.

Such a system, he said, only created complexities to do business with, and called for urgency in addressing the challenges in the VAT and other tax handles to increase compliance.

Dr Nii Kwaku Sowa, Economist, Country Director, International Growth Centre (IGC-Ghana), called for the streamlining of tax exemptions and retention policies, which he said had over time, been to the disadvantage of the country.

Speaking at the maiden Ministry of Finance Quarterly Economic Roundtable dialogue, earlier in July, he said the government should particularly consider the exemptions in the mining and construction sectors and make them beneficial to the country.

Mr Irchad Razaaly, the European Union (EU) Ambassador to Ghana, also asked the government to double up efforts to make the business climate in the country friendlier.

“We’re here to support the local value addition scheme and we want to be given the opportunity to do more,” Mr Razaaly said during a government engagement with the international community, and trade and industry captains in May 2024.

Dr Mohammed Amin Adam, Finance Minister, in accordance with Section 28 of the Public Financial Management Act, 2016 (Act 921), would present the mid-year budget review to Parliament, which would be his first, since assuming office as Finance Minister in February, 2024.

The review would provide an update on the implementation of the 2024 budget, with insights into the economic and fiscal performance for the first half of the year, the Ministry of Finance said in a statement on Monday.

It would highlight budget implementation for the rest of the year and a possible review of proposed policies on growth with a focus on Small and Medium-sized Enterprises (SMEs) growth.

It would also apprise Parliament on the implementation of the ongoing US$3 billion International Monetary Fund (IMF) loan-supported Post-COVID-19 Programme for Economic Growth (PC-PEG).

The PC-PEG is the country’s homegrown policy aimed at restoring macroeconomic stability, and debt sustainability, and ensuring inclusive growth in the face of the country’s recent economic crisis.