The Institute for Statistical, Social and Economic Research (ISSER) has called for a critical assessment of the new taxes imposed on the country in the early part of this year.
The government, as part of its revenue mobilization drive, introduced some levies and taxes in the 2021 budget, a move many criticized.
The taxes include the COVID-19 Health Recovery Levy which imposes a one percent levy on the supply of goods and services made in the country other than exempt goods or services, the Financial Sector Recovery Levy which imposes a five percent levy on the profit before tax of banks, the Energy Sector Levy which imposes an Energy Sector Recovery Levy of 20 pesewas per litre of petrol and diesel and 18 pesewas per kg on Liquefied Petroleum Gas, and the Sanitation and Pollution Levy of 10 pesewas per litre of petrol and diesel.
These tax policies took effect on Saturday, May 1, 2021.
Although the Finance Minister did not announce any new taxes in the mid-year budget review, the Director of ISSER, Professor Peter Quartey, believes a thorough evaluation of the taxes’ performance should be done so that those that haven’t achieved their purposes will be scrapped to offer some relief to businesses.
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Speaking during a post-mid-year budget review conference held in Accra on Wednesday, he outlined how well the taxes had performed three months down the line.
The freebies we enjoyed during the pandemic have to be repaid. Government in trying to do so introduced new taxes in 2021 and this yielded GHS249.7 million in revenue for the first half of the year as against a target of GHS358.1 million. The COVID-19 Health Levy and the Financial Clean-up Levy are performing better than the others. We’ve had two months, and we’ve raised less than GHS100 million out of the GHS889 million target for the COVID-19 Health Levy, for instance. If we go at this pace, can we meet the target? Some of them are actually not doing so well. The Sanitation and Pollution levy for instance is not doing well.”
Based on these figures, Professor Quartey then highlighted the need for an in-depth evaluation of these taxes to ascertain whether they are efficient means of raising revenue.
There is the need for a critical assessment of these taxes to ascertain whether they are efficient means of raising revenue rather than being a nuisance tax that stifles private businesses. Some are doing well, others are not. Businesses are complaining that the taxes are affecting them. So let’s look at the cost and benefits in terms of generating revenue. If they are not performing as expected, we could as well scrap them,” he advised.