In a bold move to revitalize the economy and alleviate financial strain on citizens, the government has unveiled a comprehensive plan to abolish several key taxes.
During the presentation of the 2025 budget in Parliament, Finance Minister Cassiel Ato Forson announced the elimination of five major taxes, marking a significant shift in the country’s fiscal policy.
Key Taxes to Be Abolished
1. Electronic Transfer Levy (E-Levy): The 1% levy on electronic transactions will be scrapped, providing relief to individuals and businesses who rely heavily on digital payments.
- Betting Tax: The 10% withholding tax on lottery winnings will be abolished, benefiting those involved in the gaming industry.
- Emission Levy: Industries and vehicle owners will no longer be subject to this levy, potentially reducing operational costs and promoting environmental compliance.
- VAT on Motor Vehicle Insurance: The Value Added Tax on motor vehicle insurance policies will be removed, making vehicle ownership more affordable.
- Withholding Tax on Unprocessed Gold: Small-scale miners will no longer face a 1.5% withholding tax on their winnings, supporting the growth of the mining sector.
Dr. Ato Forson explained that these reforms will not only ease the financial burden on households but also stimulate business growth by improving tax compliance.
“Mr. Speaker, the removal of these taxes will ease the burden on households and improve their disposable incomes. In addition, it will support business growth and improve tax compliance.”
The Finance Minister stressed that a recent study revealed that a substantial portion of the Tax Refund Account was misused over the past eight years, with GHC16.6 billion being diverted from its intended purpose.
He said “The study also revealed that GHS16.6 billion, representing 57% of the total amount accumulated in the tax refund account was misapplied, which is a total violation of the Revenue Administration Act, 2016 (Act 915) and the Public Financial Management Act, 2016 (Act 921).”
“The study also revealed that GHS16.6 billion, representing 57% of the total amount accumulated in the tax refund account was misapplied, which is a total violation of the Revenue Administration Act, 2016 (Act 915) and the Public Financial Management Act, 2016 (Act 921).”
The Minister emphasized that these measures will enhance disposable incomes and support business expansion, while also improving tax compliance.
Additionally, the government is addressing the misuse of the Tax Refund Account, where a significant portion of funds was misapplied.
To rectify this, the tax refund ceiling will be reduced from 6% to 4% of total revenue, saving GHC3.8 billion, which is sufficient to offset the revenue shortfall from the abolished taxes.
“Mr. Speaker, by reducing the ceiling on the tax refund from 6% to 4%, we will save GH¢3.8 billion. This amount is enough to close the revenue shortfall from the removal of the E-Levy amounting GHC1.9 billion and the Betty Tax of GH¢180 million”.
“Mr. Speaker, already we have saved GHC3.8 billion
for 2025 alone from only one source and this is enough to close the gap from the taxes that we have removed.”
Sources: www.kumasimail.com /Kwadwo Owusu
