Finance Minister Ato Forson has justified the government’s recent tax cuts, insisting that revenue losses from abolished levies will be offset by reallocating funds from the underutilized tax reform account.
Speaking in an interview with Evans Mensah on Joy News, monitored by www.kumasimail.com, Forson revealed that billions of cedis meant for tax refunds had been misused over the years.Feet’s
The government recently scrapped several taxes, including the 10% withholding tax on betting winnings, the electronic levy (E-levy), the missions levy, the VAT on motor vehicle insurance, and the 1.5% tax on processed gold by small-scale miners.
This decision has sparked concerns among economists about how the government plans to compensate for the lost revenue.
Forson admitted that these tax cuts would result in a revenue shortfall but assured that his administration had a plan to recover the losses.
He disclosed that since 2016, 6% of national revenue had been allocated for tax reform purposes, accumulating about GH₵26 billion.
However, to his “surprise,” only 43% of this amount had been used for actual tax refunds, while the rest was allegedly misapplied.
“I asked the Minister of Finance to give me a breakdown of how this tax reform fund had been utilized. To my surprise, only 43% had been used for its intended purpose. The rest was misapplied,” Forson stated.
To correct this, Forson announced that the government had reduced the tax reform allocation from 6% to 4%, freeing up GH₵3.8 billion this year.
He explained that this amount was sufficient to cover the estimated GH₵2.1 billion revenue shortfall caused by the tax cuts, leaving GH₵1.7 billion for essential social programs.
“We have directed GH₵1.7 billion towards social interventions, including GH₵199.5 million for sanitary pads for schoolgirls, increased feeding program funding, and a 73% rise in support for school competitions,” Forson noted.
The Finance Minister emphasized that past mismanagement of the tax refund fund was unacceptable and vowed to ensure accountability.
“The manner in which the tax refund account has been abused over the past eight years is regrettable. This practice cannot continue, and we must investigate it,” he asserted.
The revelations have reignited debate over the management of public funds, with critics calling for an independent audit of the tax reform allocations.
Dr. Forson, however, remains confident that his strategy will not only offset the tax revenue losses but also enhance public welfare.
