Professor Godfred Bokpin, a finance and economics professor at the University of Ghana, has called on the government to consider the removal of certain taxes as an opportunity to stimulate economic growth rather than viewing it as a fiscal loss.
His comments come after the government’s announcement to eliminate the betting tax, e-levy, and COVID-19 levy.
While some segments of the public have raised concerns about the revenue losses associated with these tax cuts, Prof Bokpin emphasized the potential for growth.
Speaking on Joy FM’s Midday News on Monday, ahead of the budget presentation scheduled for Tuesday, March 11, the economist estimated that the revenue loss from removing these taxes could exceed GH₵7 billion.
However, he argued that this shortfall could be offset by improving tax efficiency within existing structures, particularly corporate income tax and Value Added Tax (VAT), which he described as inefficient.
“If we can improve VAT efficiency by even 15%, it will generate more than enough revenue to cover these losses,” Prof Bokpin stated. “Let’s not see the removal of these taxes as losses; rather, they should be viewed as incentives for households and businesses to stimulate consumption and promote economic growth.”
He further explained that the revenue impact of removing these taxes is relatively small when compared to the annual tax expenditures incurred through exemptions. He also highlighted the potential to strengthen Ghana’s digital economy, which he believes is crucial for future growth.
Prof Bokpin also stressed the importance of cost savings through the reduction of wasteful expenditure and the adoption of a lean government approach. He urged the government to present clear projections for cost-cutting measures and their impact on fiscal space in 2025 and beyond.
“Expectations are high, but they should be tempered with realism,” he said. “I expect they will continue focusing on fiscal consolidation, with taxation as a key tool. However, I anticipate some revisions to the tax regime, particularly the removal of the e-levy and COVID-19 levy. The betting tax, I believe, requires further assessment due to its behavioral implications.”
Additionally, Prof Bokpin called for greater transparency in assessing Ghana’s fiscal position at the end of 2024. He acknowledged that the country is unlikely to meet its revised target of a 3.5% deficit-to-GDP ratio and a 0.5% primary surplus. He stressed the need for clarity on arrears from state-owned enterprises and other financial commitments.
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