2021 Budget: Adu-Boahen justifies imposition of coronavirus related taxes

Charles Adu Boahen, Deputy Finance Minister 1 Charles Adu-Boahen, President's representative at the Finance Ministry

Sat, 20 Mar 2021 Source: www.ghanaweb.com

Charles Adu Boahen, the President’s representative at the Finance Ministry has held that the proposed COVID-19 related taxes in government's 2021 Budget are justified.

In the recently presented 2021 budget statement, Caretaker Finance Minister, Osei Kyei-Mensah-Bonsu on March 12, 2021 announced a number of new taxes.

They include a 10 pesewa increase per litre for diesel and petroleum products, a Sanitation and Pollution Levy (SPL), a Financial Sector clean-up Levy, an Energy Sector Recovery Levy and a COVID-19 Health Levy of Value Added Tax. A cross section of the Ghanaian public, have since bemoaned the introduced of the new taxes.

But the former deputy finance minister, Charles Adu Boahen, says the country is on the right trajectory with its fiscal policies hence the introduction of such taxes is intended to support the fiscal gap created as result of the coronavirus pandemic.

Making his submission at a post-budget dialogue organised by Citi TV & UPSA, Adu-Boahen said: “Be as it may, the pandemic expenditure created a big hole. We look at the numbers and realized that our revenues were going to be down by over GH¢13 million due to COVID-19. Your expenditure goes up by GH¢11 billion. How are you going to pay for that? We figured it out and that resulted in a lot of borrowing and elevated debt levels. So really and truly, that is where the problem lies. We are not able to raise enough revenue to service our debts.”

He further explained, “Right now, our interest expense is almost 50 percent of our revenue. Unfortunately, we were on 62 percent debt to GDP ratio in 2019. If we are to go on the same trajectory for 2020 and got about 7 percent growth, we will have ended the year with 60% debt to GDP. So, we are on the right trajectory.”

“This shock puts us into a position where all of a sudden our debts have elevated and the interest, we have to pay on the unexpected money we had to borrow because of COVID-19,” Adu Boahen explained.

Meanwhile, Parliament on Friday March 19, 2021 approved the Budget Statement and Economic Policy of government for the 2021 financial year.

The approval did not pass off after some controversy, it had to resort to continuous voting. This saw some 137 MPs voting in favour of approving the budget as against 134 MPs voting against it.

The adoption of the budget means government's machinery can now kick start in earnest, what is left is the sectorial budget allocations then appropriation is done for the entire government set up.

Source: www.ghanaweb.com
Related Articles: