Professor Ransford Gyampo, the Acting Chief Executive Officer of the Ghana Shippers Authority, has commended Finance Minister Dr. Cassiel Ato Forson’s revenue measures presented in the 2025 budget statement. Prof. Gyampo, a renowned political scientist, particularly applauded the Minister’s strategic approach to addressing the anticipated revenue shortfall resulting from the removal of several taxes, including the controversial e-levy and the betting tax. He highlighted the ingenuity of reducing the tax refund ceiling from 6% to 4% as a novel and intelligent solution, contrasting it with what he perceives as a lack of critical thinking from some other individuals who, despite claiming educational credentials, demonstrate an inability to devise effective strategies. This move, according to Prof. Gyampo, showcases a deep understanding of fiscal management and a capacity for innovative thinking, attributes he believes are essential for effective governance.
The Finance Minister’s budget proposal centers around the elimination of what he termed “nuisance taxes” implemented by the preceding New Patriotic Party (NPP) government. These taxes, which include the e-levy on electronic transactions, the betting tax, the emissions tax, VAT on motor vehicle insurance policies, and the 1.5% withholding tax on winnings from unprocessed gold by small-scale miners, were perceived by the current administration as burdensome and detrimental to economic activity. Dr. Forson argued that their removal would stimulate economic growth and alleviate the financial burden on citizens. The decision to repeal these taxes, however, raised concerns about the potential impact on government revenue and the ability to fund essential public services.
Addressing these concerns head-on, Dr. Forson outlined a plan to mitigate the revenue shortfall created by the tax removals. The central pillar of this plan is the reduction of the tax refund ceiling from 6% to 4%. This adjustment, according to the Finance Minister’s projections, would generate savings of GH¢3.8 billion. He explained that this amount would be sufficient to offset the combined revenue loss from the removal of the e-levy, estimated at GH¢1.9 billion, and the betting tax, estimated at GH¢180 million. Furthermore, Dr. Forson emphasized that this significant saving of GH¢3.8 billion would be achieved from a single source in 2025 alone, demonstrating the effectiveness of the proposed measure.
The Minister’s strategy underscores a shift in the government’s fiscal policy, prioritizing economic stimulation and relief for citizens over maintaining certain revenue streams deemed counterproductive. The argument presented is that the removal of these taxes will invigorate economic activity, leading to increased overall tax revenue in the long run. By reducing the tax burden, the government aims to encourage spending and investment, fostering economic growth and ultimately generating more revenue through other avenues. The focus on reducing the tax refund ceiling, rather than introducing new taxes or increasing existing ones, signals a commitment to streamlining tax administration and maximizing efficiency.
The rationale behind reducing the tax refund ceiling rests on the principle of optimizing government expenditure. By lowering the ceiling, the government aims to curtail excessive tax refunds, which can strain the national budget. This approach allows for a more controlled allocation of resources, potentially freeing up funds for critical sectors such as healthcare, education, and infrastructure development. The Minister’s emphasis on this single measure as sufficient to cover the revenue gap highlights the perceived magnitude of potential savings from optimizing tax refund processes.
The proposed revenue measures presented by the Finance Minister represent a calculated attempt to balance the need for revenue generation with the objective of stimulating economic growth and providing relief to taxpayers. By removing what he considers to be burdensome taxes and simultaneously implementing a strategy to mitigate the resulting revenue shortfall, Dr. Forson aims to create a more conducive environment for economic activity. The success of this approach, however, remains to be seen and will depend on a number of factors, including the accuracy of the revenue projections and the overall performance of the Ghanaian economy. The public discourse surrounding this budget proposal will undoubtedly continue as its implications are further analyzed and debated.
