Keen watchers of Ghana’s economic developments are divided over the promise by the President-elect, John Dramani Mahama to scrap some taxes that he deems as nuisance taxes.
John Mahama in his 120-Day Social Contract said he is committed to scrapping taxes such as the controversial Betting Tax, E-levy, COVID-19 Levy, and Emissions Levy among other socio-economic policies, when he assumes office.
This commitment has gotten the buy-in of the general public who have thrown their support behind the scrapping of these taxes.
However, economists and analysts seem not to have a common ground on these tax cut policies. Earlier, Prof. Peter Quartey, an economist at the University of Ghana, and the President of IMANI-Africa, Franklin Cudjoe kicked against the scrapping of these taxes citing several economic, social, and behavioral reasons.
The former Executive Vice President of Unilever Ghana and Nigeria, Yaw Nsarkoh has also vehemently opposed this tax cut policies.
He argued that a “bankrupt” economy like that of Ghana cannot contemplate giving more tax cuts. He believes it is unjustifiable and populist which does not have the interest of the economy at heart.
He described the tax cuts as a “dangerous road to hell,” although he contended that the promise is shrouded by good intentions.
But the latest to wade into this debate is economist and political risk analyst, Dr. Theo Acheampong, who has expressed support for the decision by the President-elect, contrary to the perspectives of Prof. Quartey, Franklin Cudjoe, and Yaw Nsarkoh.
Dr. Theo Acheampong justified that Ghana can afford to cut these taxes earmarked by the President-elect without any financial harm.
He maintained that the total amount of money the government would lose by cutting these taxes is estimated at $458 million. While this sounds like a lot, it only makes up 0.62% of Ghana’s economy (GDP) for 2023. This is a relatively small amount in the bigger picture of the country’s finances.
He further compared the amount that will be lost to the amount of $360 million Ghana received from the IMF as part of the bailout program every four months. This, Dr. Acheampong noted, suggests that the amount lost from tax cuts isn’t so large that the economy can’t do without.
The political risk analyst also argued that the government can save even more money by improving efficiency in areas like procurement and the size of the government, insisting that the E-levy and COVID-19 levy among others are indeed “nuisance taxes.”
He implied that the taxes are unpopular, burdensome, and hurt ordinary people without providing enough benefit to justify their existence.
“The IMF has been giving us about $360 million every 4 months or so. We can make do with a hit (tax cuts) of $458 million, while still delivering bigger efficiency savings, especially on procurement and the size of government,” the Economist argued, in a post on social media.
He said “E-levy is a nuisance tax and so is the COVID-19 levy…..The promised tax cuts can be attained, meet IMF program conditionalities and other tradeoffs.”
