Ghana to Abolish Six Controversial Taxes in 2025 Budget

Ghana’s Finance Minister, Dr. Cassiel Ato Forson, announced the abolition of six contentious taxes in the 2025 budget, in line with the NDC’s manifesto promise. The abolished taxes include the Betting tax, E-Levy, Emission Levy, VAT on Motor Vehicle Insurance Policies, Tax on Unprocessed Gold, and the COVID-19 Levy. This measure aims to relieve financial burdens on households and promote economic growth, compensating through reduced tax refund ceilings.

Ghana’s Finance Minister, Dr. Cassiel Ato Forson, has announced the government’s intention to abolish several contentious taxes as part of the 2025 budget presented to Parliament. This decision aligns with the National Democratic Congress (NDC)’s 2024 manifesto promise, aimed at improving the economic landscape of the country. The specific taxes slated for removal include the Betting Tax, E-Levy, Emission Levy, VAT on Motor Vehicle Insurance Policies, Tax on Unprocessed Gold from Small-Scale Miners, and the COVID-19 Levy.

Among the taxes to be abolished, the 10% Betting Tax placed on winnings from lottery is the first, which was instituted by the prior government in 2023. Dr. Forson confirmed, “Mr. Speaker, we will abolish the 10% withholding tax on winnings from lottery, otherwise known as the ‘Betting Tax’.” The E-Levy, a 1% charge on electronic money transfers, will also be eliminated, as stated, “Mr. Speaker, we will abolish the Electronic Transfer Levy (E-Levy) of 1%.”

Additionally, the Emission Levy, effective from February 1, 2024, will be rescinded. Dr. Forson remarked, “Mr. Speaker, we will abolish the Emission Levy on industries and vehicles.” The government will also scrap VAT on motor vehicle insurance policies, a move aimed at tax relief, reflected in his statement, “Mr. Speaker, we will abolish the VAT on motor vehicle insurance policy.”

Furthermore, the government will do away with the 1.5% tax on gold sales by small-scale miners, with Dr. Forson affirming, “Mr. Speaker, we will abolish the 1.5% withholding tax on the winning of unprocessed gold by small-scale miners.” Finally, the COVID-19 Levy is expected to be removed later this year as part of VAT reforms.

Dr. Forson asserted that these tax eliminations would alleviate financial pressure on households and increase disposable income, thus encouraging business growth and enhanced tax compliance. To balance the revenue impact of these removals, the tax refund ceiling will decrease from 6% to 4% of total revenue, potentially saving GH¢3.8 billion in 2025. He expressed, “This amount is sufficient to cover the revenue shortfall from the removal of the E-Levy, which accounts for GH¢1.9 billion, and the Betting Tax, estimated at GH¢180 million.”

Through these strategic fiscal measures, the government aims to foster a more favorable business environment while ensuring economic stability for Ghana.

In conclusion, the Ghanaian government’s decision to abolish six contentious taxes underlines a commitment to fiscal reform and economic improvement. By removing these taxes, the administration seeks to alleviate financial burden on citizens and stimulate business growth. The government’s careful planning in revenue adjustments reflects a proactive approach to maintain economic stability while ensuring compliance with budgetary commitments.

Original Source: africa.businessinsider.com