Faith Nyasuguta
Ghana’s government has announced plans to abolish six controversial taxes as part of its 2025 budget. This move aligns with the National Democratic Congress (NDC)’s 2024 election promise to remove these taxes if elected into office.
Finance Minister Dr. Cassiel Ato Forson revealed the decision while presenting the 2025 budget to Parliament. He explained that removing these taxes is a key step toward reaching Ghana’s fiscal targets for the year. The government also believes this move will reduce the financial burden on citizens and businesses, encouraging economic growth.
Dr. Forson outlined the six taxes that will be scrapped, with five being removed immediately and one phased out later in the year. The taxes include:
Betting Tax:
The government will abolish the 10% withholding tax on lottery and bet winnings, which was introduced in 2023. Many Ghanaians criticized this tax, arguing it unfairly targeted young people who bet for entertainment or extra income.
E-Levy:
The unpopular Electronic Transfer Levy (E-Levy) of 1% on digital money transfers will also be removed. Since its introduction, the E-Levy faced widespread opposition, as it increased costs for those relying on mobile money and digital transactions.
Emission Levy:
Introduced on February 1, 2024, the Emission Levy taxed industries and vehicle owners to reduce carbon emissions. However, critics argued that the levy increased transportation costs and added pressure on businesses already struggling with high operational expenses.
VAT on Motor Vehicle Insurance Policies:
The Value-Added Tax (VAT) on motor vehicle insurance policies will also be scrapped. Removing this tax aims to reduce the cost of owning and maintaining vehicles, providing relief to drivers and transport operators.
Tax on Unprocessed Gold from Small-Scale Miners:
The government will remove the 1.5% withholding tax on the sale of unprocessed gold by small-scale miners. This decision is expected to boost the local mining industry, which plays a significant role in Ghana’s economy.
COVID-19 Levy:
The final tax to be abolished is the COVID-19 Levy. This tax was introduced during the pandemic to support healthcare spending but remained in place even after the crisis ended. It will be phased out later in the year as part of broader VAT reforms.
Impact of the Tax Removals
Dr. Forson emphasized that removing these taxes would ease financial pressure on households, increase disposable income, and support businesses. The government also expects this change to improve tax compliance by simplifying the tax system.
To offset the revenue loss, the government will lower the tax refund ceiling from 6% to 4% of total revenue, as outlined in the Revenue Administration Act, 2016 (Act 915). This measure is projected to save the country 3.8 billion Ghana cedis in 2025.
Dr. Forson explained that these savings would cover the shortfall caused by eliminating the E-Levy, estimated at 1.9 billion cedis, and the Betting Tax, expected to cost around 180 million cedis.
The government believes these tax cuts, combined with other fiscal adjustments, will create a more business-friendly environment while ensuring economic stability. Many Ghanaians hope that these changes will bring some relief to their daily lives and support long-term growth in the country.
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