COVID, E-levy scrap will create GH¢6.4bn loophole — survey

Removal of the Electronic levy (E-levy) and COVID-19 levy in the 2025 budget will cost Ghana a revenue shortfall of about GH¢6.4 billion, the 2025 Pre-Budget Survey has revealed.

This presents a significant challenge to the country’s fiscal space, requiring strategic and sustainable solutions.

The Minister of State for Government Communications, Felix Kwakye Ofosu, yesterday confirmed that the government would abolish the E-Levy and the COVID levy in the upcoming 2025 budget.

These measures form part of the government’s 120-day Social Contract, which outlines 26 key pledges aimed at revitalising the economy and easing the financial burden on citizens.

Among these pledges are the removal of the E-Levy, the COVID levy, a 10 per cent tax on bet winnings, and the emissions levy—all within the administration’s first 90 days in office.

Meanwhile, some experts are of the view that the removal of e-levy and COVID-19 levy will not have any major consequences for the country’s economy.

They argue that the feasibility was largely premised on the prudent management of Ghana's resources by the political leadership, which will minimise waste in the system.

The survey conducted by auditing and accounting firm, KPMG, in collaboration with the United Nations Development Programme (UNDP) gathered insights from 233 leading large, small, and medium-sized businesses across diverse sectors in Ghana on the impact of current policies and to offer actionable feedback to the government through the Ministry of Finance for the upcoming budget and future cycles.

To address the fiscal gap, respondents are proposing several targeted taxation measures.

Revenue measures

A key proposal is the introduction of a tiered property tax, which would be added to household utility bills based on the property’s value and use. They believe this will ensure a more direct and equitable collection system.

Respondents want the government to introduce a simplified flat-rate or tiered tax system specifically designed for informal sector operators such as traders and artisans, facilitated through mobile-friendly filling platforms available in multiple languages to increase compliance.

In addition, respondents proposed a digital service tax targeting freelancers, content creators, and gig workers in the growing digital economy to capture previously untapped revenue streams.

They also advocated a gradual increase of excise taxes on products such as alcohol, tobacco and sugary drinks, with a portion of the proceeds allocated to public health initiatives such as the prevention of non-communicable diseases (NCDs).

Expenditure control

Beyond the revenue measures proposed, the survey stressed the need for efficiency to curb wasteful expenditures, improve transparency in public procurement and restructure loss-making state-owned enterprises.

Additionally, respondents called for a ban on luxury vehicle imports for public institutions, while many recommended rationalising the public sector wage bill to enhance fiscal sustainability.

Businesses said a mandatory publication of all awarded government contracts including pricing details, scope and selection criteria through the e-procurement system would enhance transparency.

They further recommended restructuring loss-making State-Owned Enterprises (SOEs) through asset sales or strategic private-sector partnerships to reduce reliance on public funds.

24-hour economy

The survey said for Ghana's 24-hour economy to succeed, it should focus on industries that naturally thrive with round-the-clock operations, increased consumer demand, and global market competitiveness such as manufacturing, transport and logistics, health care, retail and hospitality and digital services.

“For Ghana's 24-hour economy to work, the right infrastructure, policies and incentives must be in place. Addressing security, power supply, transportation and taxation will give businesses the confidence to expand operations and create more jobs to ultimately drive inclusive growth,” the survey said.