Accounting, auditing and professional services firm, PricewaterhouseCoopers (Ghana) LTD, has said that the message in the 2023 Budget is timely and consistent with the challenges facing the economy.
It said the decision to use the budget to signal an aggressive effort to grow revenue and reduce expenditures was appropriate and necessary to help reduce the fiscal deficit and contain the pace at which prices of goods and services increase.
The firm, however, said some of the policy proposals lacked sufficient detail and thus called for additional information to enable businesses and consumers to plan effectively.
The Country Senior Partner of PwC Ghana, Vish Ashiagbor said in an interview today, Tuesday that while the proposal to cut spending by ministries, departments and agencies (MDAs) was good, it was not clear how much would be realised from the exercise.
Ashiagbor noted that the debt exchange programme proposed in the budget also lacked sufficient clarity, resulting in rising speculation by market actors.
Post-budget forum
Ashigbor was speaking to the Graphic Business ahead of PwC’s post-budget forum on Wednesday, November 30.
The virtual event is expected to feature expert discussions on key aspects of the budget in an attempt to bring more clarity.
Ashiagbor, who will host the event, said the budget generally met the expectations of PwC, given the economic crisis in which the country found itself.
On revenue, he said the resort to indirect taxes to help mobilise more revenues was understandable, as it had the potential to rake in more money within a shorter timeframe. However, efforts to widen the tax net need to be implemented alongside the increase in tax rates.
In the 2023 Budget, the Finance Minister, Ken Ofori-Atta, asked Parliament to grant an increment in the value added tax (VAT) rate from 12.5 per cent to 15 per cent, the reduction in the E-Levy rate to 1.5 per cent and the scrapping of the GH¢100 daily threshold.
Tax net
Ashiagbor said he expected almost immediate results as indirect taxes cut across consumers as opposed to direct taxes that affect only a few.
In the short term, there is the need to raise as much revenue as possible. So whether VAT or E-Levy, these are quick wins but in the medium to long-term, the focus should be how to cast the net a lot wider,” he said.
“We still believe that the better approach is to focus on enforcement and casting the net wider but those take time as opposed to as satisfying an immediate need,” he added.
He cited enforcement as one of the strategies that the government should focus on to help increase collections as opposed to new taxes and increments in existing rates.
Signaling effect
On expenditure, Ashiagbor said it was good that the government was signaling cuts in expenditures but said more information was needed to help guide the market.
As an example, he said while the proposed cut in fuel consumed by government institutions was good, the government needed to tell the nation how much would be saved through this effort.
He said the same applied to other proposed expenditure measures captured in the budget.
He also called for more detailed information on the debt exchange programme, noting that the current piecemeal approach and sometimes conflicting messages, was fueling rumours