Finance Minister designate promises economic relief - E-Levy, betting tax to go
The Minister of Finance designate, Dr Cassiel Ato Baah Forson, has stated that his topmost priorities will be to work very hard to lower prices, stabilise the Ghana Cedi and create jobs towards lowering the cost of living for Ghanaians.
He said in the short term, the government would anchor prices on the careful cutting of wasteful expenditure and fiscal consolidation while protecting growth and the vulnerable.
In addition, he said: “There is an urgent need to reduce inflation by tackling food inflation”.
Scrapping taxes
Answering questions from Parliament’s Appointments Committee yesterday, Dr Forson said the government would scrap taxes that constituted a nuisance to Ghanaians.
Accordingly, he said, burdensome taxes, including the betting tax and the e-levy that were imposed by the previous administration, would be scrapped in the first budget if he is approved as the Finance Minister.
He said he had written a number of articles and spoken “against the implementation of the e-levy, and I still stand by it.”
"In the first budget of this government, I want to assure you that the e-levy will go," he stressed.
Dr Forson said his position on the e-levy did not mean he did not appreciate the need for revenue.
He explained, “However, the e-levy is not a direct, an indirect or excise tax”, adding that e-levy retarded progress towards financial inclusion and a cash-lite economy.
Bridging gap
In response to a question on how the revenue gap to be created by the scrapping of nuisance taxes would be bridged, the Minister of Finance designate said a concerted effort would be made to increase tax revenue from the current 13.8 per cent of gross domestic product (GDP) to about 16 per cent.
"Let us look at the betting tax, for instance, it brings in less than GH¢15 million, but it is a nuisance tax to Ghanaians. If we scrap this tax and improve tax collection, we will be fine," he said.
Vetting
The Appointments Committee of Parliament yesterday vetted the three ministerial nominees of President John Dramani Mahama. The others are the Minister of Energy and Green Transition, John Abdulai Jinapor, and the Attorney-General and Minister of Justice, Dr Dominic Akuritinga Ayine, who took turns to be vetted.
Context
The vetting process involved a thorough scrutiny of the nominees' qualifications, suitability for their respective roles and the gauging of their emotional intelligence.
Dr Forson is seeking to occupy the Finance Ministry at a time the country is not doing too well in terms of domestic tax mobilisation.
For instance, as of January 2024, the Ministry of Finance’s published updated Survey of the Ghanaian Tax System produced jointly with TaxDev researchers from the Institute for Fiscal Studies (UK), indicated that the country's tax-to-GDP ratio of 13.8 per cent remained below the government’s target of 18 to 20 per cent by 2027.
Prudence
Against that backdrop, Dr Forson said the best way forward was to improve tax revenue and ensure that nuisance taxes were scrapped.
Contrary to assertions that the scrapping of nuisance taxes would leave a gaping revenue gap that would stifle economic growth, he stressed that "we can improve revenue mobilisation and ensure that we are prudent in the use of public resources."
Dr Forson also said apart from scrapping burdensome taxes, his preoccupation, when approved by Parliament, would be to immediately work to bring down inflation.
He said bringing down inflation would help to reduce the exchange rate and improve the ease of doing business.
"When we immediately work to bring inflation down, it will help to bring the exchange rate down because the exchange rate is a function of inflation," he said.
Tax exemptions
Asked what his view on tax exemptions was, the minister designate said such exemptions must be properly targeted, if there was the need for them at all.
Dr Forson stressed that unguarded tax exemptions played a role in increasing tax rates for other people and companies.
"On the issue of tax exemptions, my position is that everyone must be given the opportunity to pay taxes," he said.
Making specific reference to tax exemptions for one district, one factory (1D1F) companies, he said it was not proper for some companies to be granted tax exemptions while others doing the same businesses did not have such an opportunity.
"If the government wants companies to benefit from tax exemptions, it should be put in the law for everyone to benefit," he stressed.
Public debt
Touching on public debts, he said the current government would do its best to reduce public debt to bring the economy back on track.
He said as a measure to efficiently manage public debts, an independent debt management office would be set up by the government.
While acknowledging the mounting debt obligations facing the country, he stressed that effective financial management measures would be adopted to bring the economy out of the woods.
For instance, he said as Minister of Finance, proactive steps would be taken to clear the harm created as a result of the debt restructuring programme by the previous government.
"This year alone, we face domestic amortisation payments of GH¢12.6 billion. By 2026, it rises to GH¢15.7 billion, and in 2027, we confront GH¢48 billion in repayments. It is frightening and worrying, but we will take the bull by the horns," he stressed.
He further said the external debt pressures were equally concerning, with the country already paying $364 million in 2024.
Again, he said beginning next year, the government would be compelled to pay $1 billion annually to service eurobond debt.
“We must learn from past mistakes and avoid firefighting during financial crises.
“We are fully aware of the difficulties, but let me assure the people of Ghana that we will manage the debt responsibly and with transparency," he said.