Some tax analysts have cast doubts the ambitious tax proposals announced in the manifestoes of the two major political parties, the New Patriotic Party (NPP), and the National Democratic Congress (NDC) can be rolled out under an International Monetary Fund (IMF) programme.
Both parties have promised to remove the e-levy, the COVID-19 levy and reduce some taxes at the ports.
But Speaking to Joy Business, tax analyst, Francis Timore Boi cautioned that the blanket removal of the taxes without alternative plans to boost revenue may derail the IMF programme.
He argued for example that the COVID-19 levy and the e-levy combined is projected to give government about GH₵7.7 billion in 2025.
Mr. Timore Boi expressed worry that no alternative revenue generation model has been proposed by the two major parties to make up for the shortfall that may occur as a result of the proposal to remove the taxes.
He warned that this could run contrary to the IMF programme aimed at improving revenue and redirecting government expenditure to critical areas to help alleviate poverty.
“If any policy you seek to introduce may bring down revenue, the IMF may not be happy with that. You are planning to abolish the COVID-19 levy and the e-levy. COVID-19 levy alone in 2025 is estimated to bring in about GH₵5.6 billion. If you take it off, how are you going to replace it? In 2025, we are expecting e-levy to give us about GH₵2.1 billion and in 2026, it is projected to increase to about GH₵2.4 billion”.
Stressing the need to assess such tax proposals, Mr. Timore Boi said the political parties must provide a workable budget that will provide a foresight of how the revenue shocks that will be created will be remedied.
“It is important because the budget has not shown us that you are going to introduce new taxes”.
He added that even though e- levy is an unpopular tax and the general sentiment is that it should go, there must be a proactive discussion on how to plug the financial holes that will be created after its abolishment.
Source: Lawrence Segbefia
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