Review tax exemptions to rake in more revenue – IEA to government

The Institute of Economic Affairs (IEA) has advised government to take a relook at the country’s tax exemptions regime in order to accrue more revenue into the public purse.

The IEA believes that reviewing the current tax regime will open up the tax base and widen the tax net.

Addressing the press on Tuesday, March 23, Director of Research at IEA, Dr J. K. Kwakye noted that parliament needed to look at a dormant bill on tax exemptions which has been pending since 2019.

“We lose revenue in excess of GH¢5 billion (or about US$1 billion) through tax exemptions annually. We know tax exemptions are subject to considerable abuse. Government enacted a bill to streamline the exemptions, but it has been languishing in Parliament since 2019.

“The political will to pass the bill seems to be lacking, ostensibly due to entrenched interests. We urge Parliament to pass the bill with urgency to plug a big hole in the tax system," he added.

Government introduces COVID-19 levy

Government has said the 2021 budget statement and economic policy is anchored on fiscal consolidation, amid the impact of Coronavirus pandemic on public finances.

In a bid to contain the pandemic, government announced a number of taxes which included a COVID-19 levy. The levy according to caretaker Minister of Finance, Osei Kyei-Mensah-Bonsu, was to help boost the capacity of the health sector as Ghana continues to combat the pandemic.

The minister made the remarks while presenting the budget earlier this month, adding that the proposal would result in a slight increase in some existing tax policies.

"We propose a one percentage point increase in the national health insurance levy and a one percentage point increase in the Value Added Tax flat-rate to support expenditure related to COVID-19," he said during the presentation.