Tax reliefs welcome but fiscal responsibility needed

President John Dramani Mahama last week assented to a set of amended bills of Parliament, effectively abolishing the Electronic Transfer Levy (E-Levy), the betting tax, the Emissions Tax, among others. 

The affected laws included the Electronic Transfer Levy (Repeal) Bill, 2025; the Emissions Levy (Repeal) Bill, 2025; the Income Tax (Amendment) Bill, 2025; and the Earmarked Funds Capping and Realignment (Amendment) Bill, 2025.

This action which has brought widespread relief to citizens and businesses alike represents a significant shift in fiscal policy and deserves commendation.

The Government has explained that as part of its tax reform agenda it is implementing measures aimed at improving disposable incomes of households and reducing the overall tax burden of taxpayers.

The e-levy, which imposed charges on electronic financial transactions, had become a burden on the digital economy.

Since its implementation, it had inadvertently slowed the national drive towards financial inclusion and cashless transactions.

Many citizens, particularly those in lower income brackets, had reverted to cash-based transactions to avoid these charges, undermining years of progress in digital financial adoption.

Similarly, the emissions levy, while well-intentioned in its environmental goals, had been criticised for its timing and implementation. In a developing economy where many citizens rely on old vehicles and electricity power generators due to infrastructural challenges, the levy disproportionately affected those least able to transition to greener alternatives.

The tax on betting winnings, meanwhile, had pushed gambling activities underground, leading to reduced oversight and consumer protection while failing to generate the expected revenue.

The Daily Graphic believes the abolishment of these taxes represents a government willing to listen to public concerns and adapt accordingly.

It shows recognition that economic growth sometimes requires reducing barriers to participation rather than increasing them. 

Businesses can now transact more freely, consumers can engage more confidently with digital financial services, and the regulatory environment for these sectors can develop more organically.

However, this newfound tax relief creates an undeniable fiscal challenge that must be addressed with both creativity and responsibility.

The government now faces a significant revenue gap that cannot be ignored in a time when public services and infrastructure development demand substantial investment.

To compensate for this shortfall, the government must pursue several strategies simultaneously.

First, it should implement more efficient tax collection methods for existing streams by addressing leakages and ensuring compliance from all sectors. 

The informal economy, which represents a substantial portion of economic activity, must be gradually brought into the tax net through incentivised formalisation rather than punitive measures.

Secondly, we believe government spending must undergo rigorous review to eliminate waste and unnecessary expenditure.

Public sector efficiency must improve, with technology deployed to streamline operations and reduce overhead costs.

Economic growth itself must become a primary tax strategy.

By creating an environment that encourages entrepreneurship, investment and innovation, the government can expand the tax base naturally without increasing the burden on individual taxpayers.

Finally, the government should consider introducing more progressive taxation models that ensure those with greater means contribute proportionally more, while protecting lower-income citizens from undue burden.

The abolishment of the controversial taxes represents a positive step toward a more balanced approach to fiscal policy.

However, it is merely the beginning of what must be a comprehensive reform of our tax system.

The true measure of this policy's success will be whether the government can maintain fiscal discipline while finding more equitable ways to fund essential public services.

The relief is welcome but responsibility must follow.

Citizens and businesses have been given a breathing space; now the government must demonstrate its commitment to sustainable fiscal management without returning to the same well.