Ghana would lose GHS 6.4 billion in revenue if the COVID-19 tax and e-levy are eliminated.

It is estimated that the removal of the COVID-19 tax and the E-Levy will cost the GHS 6.4 billion in revenue in 2025 alone.

Concerns have been raised over the viability of President-elect John Dramani Mahama's bold plan to eliminate these tax lines, especially in light of Ghana's current IMF-supported program. The upcoming National Democratic Congress (NDC) government's announcement to remove these two tax handles may result in a substantial revenue shortfall in Ghana's budget for the next year.

Since the levies are expected to peak in 2025 in order to balance government finances despite economic challenges, this scenario poses significant concerns to budgetary sustainability.

According to government projections, E-Levy is anticipated to produce GHS 2.4 billion in 2025, up from the GHS 2.1 billion allocated for this year.

Likewise, it is anticipated that the COVID-19 Levy will generate GHS 3.97 billion in 2024, up from GHS 3.1 billion in 2024.

Based on these calculations, the two tax streams are anticipated to contribute an additional GHS 1.2 billion in 2025 compared to the 2024 figures.

This GHS 6.4 billion loss could undermine funding for critical sectors of the economy.

The government may be forced to borrow money as a result of the revenue gap, which would increase Ghana's vulnerability to economic risks and the nation's already unmanageable debt levels. Without clear alternative revenue sources, analysts warn that eliminating these taxes could jeopardize fiscal stability and sabotage the nation's precarious attempts at economic recovery.

Some industry players believe the solution lies in reducing import exemptions. They are estimating potential tax savings of approximately GHS 9 billion in this regard.

About GHS 1.7 billion of the approximately GHS 3.5 billion in direct tax exemptions at the ports were authorized by the government. Furthermore, certain imported commodities have a zero rating. We could make a lot of money if those things are examined. The total estimated value of port exemptions and zero-rated imports is about GHS 9 billion. Francis Timore-Boi, a tax consultant, states that the revenue loss resulting from the removal of the two charges can be recovered if these exemptions are reduced.

Although the proposed cancellation is in line with the NDC's objective of reducing the tax burden on individuals and companies, careful consideration of the economic trade-offs is necessary, particularly when it comes to closing this revenue shortfall during the continuing economic recovery.