Revenue Measures Introduced by Ghana’s 2021 Budget Statement
Ghana’s 2021 Budget Statement, delivered on 12 March 2021, featured four new tax levies: a COVID-19 Health Levy to manage COVID-19-related expenditure, a Sanitation and Pollution Levy to ensure quality and sustainable sanitation management, an Energy Sector Recovery Levy to finance excess capacity charges, and a Financial Sector Clean-up Levy to defray outstanding commitments to investors and depositors.
The COVID-19 Health Levy comprises a 1% increase – from 2.5% to 3.5% – in the National Health Insurance Levy which is taxed on goods and services, as well as a 1% increase – from 3% to 4% – in the Value Added Tax flat rate which is taxed on supplies of a wholesaler or retailer of goods. Should suppliers opt to pass on the increment, consumers can expect a rise in retail prices.
The Sanitation and Pollution Levy is a 10 pesewa increase on the price per litre of petrol and diesel while the Energy Sector Recovery Levy is a 20 pesewa increase on the price per litre on petrol and diesel. The combined effect of these two levies will be a 5.7% increase in petroleum prices at the pump which translates into increased transportation prices on consumers. The Financial Sector Clean-up Levy will impose a 5% levy on the profit-before-tax on banks; this levy will be reviewed by the government in 2024. Banks will therefore need to account for this levy and may see a reduction in their net profits if they fully absorb it.
Alongside the four levies, the government intends to streamline its revenue collection. First, the Ghana Revenue Authority will increase its efforts to prevent tax evasion and underreporting. Additionally, road tolls will be reviewed to align with current market rates; to that end, the government intends to amend the Fees and Charges (Miscellaneous Provisions) Act, 2018 (Act 983) to provide for an automatic annual adjustment in toll rates, pegged to average annual inflation for the previous year. A comprehensive gaming policy will also be developed to prevent leakages in the sector as a result of digitisation.
Businesses and consumers are encouraged to be mindful of their potentially rising tax obligations as the government intensifies its undertaking of revenue maximisation.