Dr. Alex Ampaabeng, a tax policy analyst, has advised the government to exercise caution in introducing new taxes during the 2023 mid-year budget review, set to be delivered on July 25, 2023.
While acknowledging the importance of bolstering domestic revenue, Dr. Ampaabeng warned that imposing new taxes on Ghanaians could potentially burden the nation. Instead, he suggested implementing robust mechanisms to address tax administration leakages, including the prevention of underpayment.
Dr. Ampaabeng made these remarks during an event organized by the Economic Governance Platform in Accra. The platform comprises 15 Civil Society Organizations (CSOs) and Policy Think-tanks.
He cited the Domestic Debt Exchange Programme (DDEP) as a contributing factor to approximately 80 per cent of banks in Ghana reporting losses in their latest financial statements, resulting in the government losing taxes as well. These losses have implications for the entire economy, affecting various sectors and individuals seeking loans for business ventures.
Dr. Ampaabeng pointed to the success of the electronic invoicing system introduced by the Ghana Revenue Authority (GRA) as evidence that efficient tax implementation can lead to increased government revenue. He highlighted that year-on-year VAT grew by 92 per cent in the last quarter, following the introduction of e-invoicing, which curbed underpayment.
Dr. Ampaabeng emphasized the need to avoid overburdening taxpayers and, instead, expand the tax net to ensure all qualifying individuals and entities contribute their fair share.
Regarding the current economic challenges faced by businesses due to increased electricity and water costs, inflationary pressures, and exchange rate fluctuations, he urged the government not to introduce new taxes. Instead, he advocated for enhanced tax administration strategies and the integration of electronic systems across all tax processes.
Furthermore, Dr. Ampaabeng called for the reconsideration of the abolished road toll levy and the elimination of the electronic transactions levy (E-levy), which has failed to meet its revenue targets since its introduction.
Another economist, Dr. John Kwakye from the Institute of Economic Affairs (IEA), emphasized the need for pragmatic measures to maximize earnings from natural resources such as gold, cocoa, diamonds, and oil.
He expressed concern about foreign entities benefitting disproportionately from Ghana’s natural resource wealth.
Dr. Kwakye also emphasized the importance of collaboration between the Bank of Ghana (BoG) and the Ministry of Finance to balance monetary and fiscal measures effectively.
He suggested adopting a multipronged approach to address inflation and other economic pressures as the government undertakes reforms supported by the US$3 billion International Monetary Fund (IMF) bailout program.