Former Senior Vice President of Unilever Ghana & Nigeria, Yaw Nsarkoh, has raised concerns about Ghana’s current tax policy direction, warning that the government may be forced to reintroduce the scrapped taxes under different names as economic growth projections take a nosedive.
This prediction from the business leader follows the World Bank’s recent revised economic growth projections for Ghana.
The World Bank earlier projected Ghana’s Gross Domestic Product (GDP) to expand by 4.4% in 2025. However, the latest update has projected a rather slower growth from 4.4% to 3.9%
This development, Yaw Nsarkoh says, shows that the country’s highly anticipated “tax buoyancy”, the idea that lowering taxes would automatically increase government revenue by spurring rapid economic growth, has failed to materialize.
In his view, the expectation that tax cuts would generate enough economic activity to offset revenue losses was based on overly optimistic assumptions that are now being tested by real-world data.
He cautioned that with Ghana’s projected modest growth rates, the country’s fiscal pressures could soon compel policymakers to reintroduce previously abolished taxes or create new ones.
“The much-trumpeted tax buoyancy of neoliberals has not materialised?” Nsarkoh quizzed in a Facebook post to react to the World Bank’s downward review of Ghana’s economic growth.
Nsarkoh questioned the recent removal of some tax handles touted nuisance, including betting tax, describing it as a short-sighted move in a country struggling with revenue mobilization challenges.
“The overall econometric model for reducing taxes is complex. It should never be done in haste, or else the government loses money with no real returns. But we are so polarised, everything is viewed through a partisan lens,” he remarked.
He continued, “We even removed a betting tax – for what? At these projected growth rates, taxes will simply have to be reintroduced under different names. Time is a great arbiter for the patient.”
For Yaw Nsarkoh, with the slowed growth rate threatening the tax buoyancy anticipated, it is just a matter of time for the government to reintroduce the scrapped taxes under different names to make up for the revenue shortfall.
As he put it, “time is a great arbiter.”
