Taxes resulting from IMF programmes make vulnerable worse off

THE conditionality attached to assistance provided by the International Monetary Fund (IMF) to Ghana, leading to the imposition of taxes has made the vulnerable, especially women worse off, a research report has revealed.

The research by a non-governmental organisation (NGO), Action Aid Ghana, and conducted by Economist and Professor of Finance at the University of Ghana, Prof. Godfred Bopkin, showed that IMF conditionality and recommendations often resulted in regressive tax policies that disproportionately affected the livelihoods of the poor and vulnerable.

Titled “Impact of IMF Policies on Tax Systems and Gender Equality in Ghana”, the research explained how IMF’s recommendations had played a significant role in tax reforms by the country to broaden the tax net, leading to the imposition of indirect tax such as Valued Added Tax (VAT) and E-Levy.

Such indirect taxes, the research said, were designed in a manner that significantly affected the incomes of the poor, thus making it difficult for such people to be economically viable, further deepening inequalities in the country.

“Ghana’s long-standing engagement with the IMF has resulted in extensive economic reforms, particularly in tax policy. These reforms have mainly depended on indirect taxes like VAT to raise money and stabilise the budget. Thus, disproportionately burdening lower-income households, where women are often overrepresented,” the research stated.

The research, which was based on a mixed method analysis, combining textual and quantitative analysis of data from public sources, as well as media reports, further stated that despite the IMF having a gender policy, it failed to put in much effort to ensure that its recommendations to the country were gender-sensitive.

“The IMF’s focus has remained largely on macroeconomic indicators, with insufficient attention to the gender-specific impacts of these policies, thereby missing the opportunities to promote inclusive growth that benefits all segments of the population,” the research added.

Recommendations

To mitigate the problem, the research recommended the promotion of gender-sensitive tax policies, which would provide targeted tax reliefs for low-income earners and support women in the informal sector.

Again, the study called for gender impact assessment before the implementation of tax reforms to ensure that tax policies do not disproportionately burden women and other vulnerable groups.

The study further advised the IMF to put a premium on its gender strategy of 2022, when making recommendations to countries.

“A superficial IMF gender policy is not really helpful at this moment, where the Fund appears to be slagging behind,’ the research added.

Additionally, the research called on the IMF to move away from its common practice of recommending austerities to countries, which,  it said, had created “zombie economies”.

“To change this, the IMF needs to hold governments accountable and push them to explore alternatives and resist the ideological advice that does not inure to the benefit of local people,” the research said.

Writer’s email: emma.hawkson@graphic.com.gh