Ghanaian businesses and consumers are holding their breath ahead of the 2026 Budget Statement presentation, scheduled for Thursday, November 13th. High expectations are centering on two specific fiscal measures: the withdrawal of the controversial COVID-19 Health Recovery Levy and the reversion to the previous mode of calculating Value Added Tax (VAT).
The withdrawal of the Covid levy was a campaign promise by the current government and since assuming power in January this year, the promise has been repeated many times by the Finance Minister and the President of the Republic, suggesting strongly that the 2026 budget presentation will announce its removal.
Economic analysts suggest that the withdrawal of these levies and the easing of the tax regime are critical steps required to boost private sector confidence, reduce consumer price pressures, and solidify Ghana’s commitment to the structural reform targets under its current economic programme. However there are those who are worried that it could lead to a drop in government revenue, as the levy was projected to have raked in some GHS 1.3 billion in the first half of 2025.
The End of the COVID-19 Levy
Introduced in 2021 as a temporary measure to fund pandemic-related expenses and economic recovery initiatives, the COVID-19 Health Recovery Levy currently adds 1% to the consumption base of standard VAT goods and services.
Market observers and industry groups have consistently argued that the levy has outlived its purpose and now acts as an unnecessary burden on the already strained cost of living. They argue that its continued application is punitive, especially for small and medium enterprises (SMEs) struggling with high utility tariffs and borrowing costs. Removing this levy, which is expected to cost the government approximately GHS 3.5 billion annually, would serve as an immediate stimulus for consumer spending.
The withdrawal of this levy is widely viewed as a low-hanging fruit for the government to demonstrate responsiveness to public grievances and provide direct cost relief.
Easing the VAT Burden: Reversion to the Old Formula
Perhaps the most technical, yet equally impactful, expectation relates to the Value Added Tax. Businesses are eagerly anticipating a reversion to the pre-2019 VAT calculation formula, which is expected to simplify the tax regime and eliminate certain ambiguities that currently add to the effective cost of business, particularly for importers.
While the exact details of the ‘old formula’ differ depending on the specific sector, the anticipated move is expected to alleviate complexities surrounding input tax deductions and the method of assessing the tax base on certain imports.
The current calculation methods have inadvertently led to higher effective taxation for manufacturers and traders. Industry players say the simplification of the VAT base, returning to a clearer, less ambiguous formula, is not just about reducing the tax rate but it is also about predictability and efficiency.
The Policy Conundrum
The decision to withdraw revenue streams, especially the levies, presents a tightrope walk for the Finance Minister, who must balance the need for economic relief with the government’s commitment to achieving a primary fiscal surplus.
Both the COVID-19 Levy and the specific VAT regime changes were implemented to broaden the tax net and ensure stability during difficult financial periods. Their reversal, while offering relief, will put pressure on the Ghana Revenue Authority (GRA) to find alternative, more efficient ways to collect revenue to hit the government’s targets.
The budget is expected to outline how the revenue shortfall from the anticipated withdrawals will be offset, likely through aggressive digitalization of the tax base, improved property rate collection, and enhanced efficiency in customs administration.
As Thursday approaches, the prevailing sentiment is one of cautious optimism. The business community believes that the relief provided by these expected changes—one direct (COVID Levy) and one structural (VAT formula), is necessary to catalyze the economic.
