True to its words, the government has announced its commitment to scrap some taxes deemed to be nuisance taxes as promised in its manifesto ahead of the 2024 General Elections.
Finance Minister, Dr. Cassiel Ato Forson, in presenting the maiden budget for the government, announced about six taxes which have been earmarked for abolishment.
These taxes include the 10% withholding tax on lottery winnings (popularly known as the “Betting Tax”), the 1% Electronic Transfer Levy (E-Levy), the Emission Levy on industries and vehicles, VAT on motor vehicle insurance policies, the 1.5% withholding tax on unprocessed gold by small-scale miners, and the COVID-19 levy.
Dr. Cassiel Ato Forson maintained that the scrapping of these taxes will bring relief to Ghanaians and ease the burdens of businesses.
“Mr. Speaker, the removal of these taxes will ease the burden on households and improve their disposable incomes. In addition, it will support business growth and improve tax compliance,” the Finance Minister indicated.
Following the announcement, there is the tendency for a section of Ghanaians to believe that the scrapping of these taxes will take immediate effect.
If that is your thinking and you are eager to enjoy these tax breaks immediately, then you may need to exercise patience, at least for some time. At this point you will be asking the obvious question, why?
Well, the reality is that the implementation of these tax cuts won’t happen overnight. A series of legislative and administrative processes must be completed before the tax relief takes effect.
The removal of these taxes requires formal amendments to Ghana’s tax laws. These amendments must be drafted, debated, and approved by Parliament. This process could take weeks or even months, depending on the level of scrutiny and opposition.
Moreover, even after Parliament passes the necessary amendments, they must receive the President’s signature to become law. Any delays at this stage could push back implementation further.
The Ghana Revenue Authority (GRA) must update its systems, train staff, and issue guidelines to ensure smooth enforcement of the new tax policies. Without these adjustments, the changes could create confusion and implementation challenges.
It is important to also note that the COVID-19 levy is a special case. This is because this levy is tied to the current IMF program and hence will require funds approval. To put simply, a successful abolishing of the COVID-19 will depend on how the government is able to convince the IMF to grant that request.
Aside from this, since the COVID-19 is under VAT and will also depend on the VAT reforms announced by the Minister.
In conclusion, all these tax cuts cannot come into effect until the appropriation is passed by parliament.
From the ongoing discussion, it could be deduced that “it is a long walk to freedom” hence those expecting immediate implementation must sit tight and bear with it at least for weeks if not months.
For now, businesses and individuals should stay updated through official government sources and the GRA for announcements regarding when these tax changes will take effect. Until the legislative process is complete, taxpayers should continue complying with existing tax obligations.
