Fitch Solutions has raised concerns over the National Democratic Congress’s (NDC) plans to abolish certain taxes introduced by the current administration, labeling the NDC Tax Proposals as largely political and potentially detrimental to fiscal consolidation efforts.
The UK-based research and consultancy firm highlighted that the promised removal of the Electronic Transaction Levy (E-Levy), Emissions Levy, and Covid-Levy may undermine Ghana’s economic stabilization goals. Some analysts however argue that these taxes labelled as nuisance can be scrapped without crippling the economy.
Speaking during a Sub-Saharan Africa webinar, Mike Kruiniger, Associate Director at Fitch Solutions, emphasized the importance of Ghana’s ongoing IMF Extended Credit Facility. The programme aims to strengthen public finances and reduce budget deficits. “Despite the rhetoric from the NDC, we anticipate a renewed focus on fiscal consolidation under their likely administration,” Kruiniger stated, referring to the NDC Tax Proposals.
He further noted that while NDC flagbearer John Mahama has indicated plans to renegotiate the IMF programme and revise certain taxes introduced by the New Patriotic Party (NPP), the targeted levies contribute less than 3% of total public revenue. “The removal of these taxes appears more symbolic than fiscally impactful,” he added. The NDC Tax Proposals will likely spark more debate on this issue.
On the likelihood of renegotiating the IMF agreement, Kruiniger expressed skepticism about any moves that might strain Ghana’s relationship with the Bretton Woods Institution. The NDC Tax Proposals might play a significant role in these discussions.
Fitch Solutions recommended that the NDC prioritize fiscal stability over politically driven tax reforms, warning that fiscal tightening will be essential for sustaining economic recovery and ensuring long-term financial health.
