Time to remove coronavirus tax – Fiscal Policy Analyst

Dr Alex Ampaabeng, a Fiscal Policy Analyst, has called on the government to scrap the COVID-19 tax to ease the tax burden of citizens.

The COVID-19 Health Recovery Levy is a special levy on the supply of goods and services and imports to raise the needed revenue to mainly support COVID 19 expenditures.

The levy was introduced in 2021 through an ACT of parliament and was applicable to both Standard Rate and Value Added Tax (VAT) Flat Rate registered persons.

Fortunately for Ghana, the increased herd immunity due to nationwide vaccination drive, administering of boosters as well as the strict adherence to COVID-19 protocols have contributed to a significant reduction in case count of the disease.

Dr Ampabeng said the Mid-year Budget review was an opportunity for government to provide respite to

citizens who have suffered from unfavourable economic conditions that had been characterized mainly by high inflation.

“I think that if that 1 per cent means you are going to pay 1 per cent less on items that we buy, it is still something. Beyond the financial incentive, tax is about fairness and what are exactly are we paying the levy for? Where is the COVID-19,” he said during an interview with the Ghana News Agency (GNA) on expectations for the Mid year Budget review.

He also expected a review of government’s flagship programmes, realistic expenditure cuts, updates on property tax collection, Professor Peter Quartey, the Director, Institute of Statistical, Social and Economic Research (ISSER), said the government could use the platform for the mid-year budget review to deepen accountability by giving a breakdown of how the US$600 million from International Monetary Fund (IMF) was disbursed.

He said he expected the government through the Central Bank to continue, among other things, to sustain the relative stability of the exchange rate and fight inflation without hurting the manufacturing sector of the economy.

“As we continue to increase the policy rate, it means we are mopping excess liquidity and increasing lending rate. So, to what extent are we going to strike a good balance to ensure businesses, or the private sector thrives” he said.

He expressed the hope that the government would listen to concerns raised about its size and announce a downsize of the number of appointees.

Dr Charles Nyaaba, the Executive Director of the Peasant Farmers Association of Ghana (PFAG), called on the government to give tax waivers and remove import duties on agro-inputs and machineries to bring down the cost of farm inputs and reduce the cost of production.

He said the government should also speed up a credit guarantee system to encourage the private sector to invest in value addition, food processing and packaging.

“Invest heavily in our irrigation development as a risk mitigation measure to encourage the youth and other private investors to go into production,” he said.

He said the reason for the high cost of vegetables such as tomatoes, garden eggs and pepper were due to over-reliance on importations due to poor irrigation infrastructure and storage systems.

Dr Nyaaba said once the infrastructure was put in place, farmers who were business oriented would go in to produce.

He urged the government to facilitate the establishment of fertilizer manufacturing in the country and improve funding for research and development.

The Executive Director said the Economic Enclave Project concept was good but given that “we are at a crossroad, where agriculture is on the verge of collapse, I expect to see more radical approach in terms of investment in the agricultural sector.”