Ghanaians will experience a major relief from 1 January 2026 as the payment of the 1% COVID-19 Health Recovery Levy on most goods, services, and imports will be history.
President John Dramani Mahama, after parliament passed the repeal, has hurriedly assented to the move, fulfilling a campaign promise. This move is expected to put money back into households and businesses.
For the government, the development represents a promise made, promise delivered.
The repeal is welcome news for shoppers, traders, taxi drivers, and small shop owners who have watched the cost of living creep up over recent years.
However, amid the jubilations, the gain for consumers comes at a heavy price for public finances. The levy has been a multi-billion-cedi revenue stream since it began in May 2021, and removing it will subtract billions from the state’s yearly tax haul.
What the Levy Raised — The Tally So Far
The levy was introduced in May 2021 and charged at 1% on the taxable value of supplies and imports. Official figures show it grew rapidly as economic activity recovered after the COVID-19 pandemic.
2021 (May–Dec): GH¢773.93 million. This was just the first eight months of implementation.
2022: GH¢1,715.89 million (≈ GH¢1.72 billion).
2023: GH¢2.18 billion.
2024: GH¢2.94 billion.
Taken together, Ghana collected roughly GH¢7.61 billion from the COVID-19 levy between May 2021 and December 2024. This is a significant addition to public coffers over four years.
Immediate Relief — Who Benefits and How?
Since the levy was built into prices, its abolition will lower the tax component of many everyday purchases, from groceries and restaurant meals to some imported goods and services. For ordinary consumers, this means a relatively small but real drop in the price tag on taxed goods and services from 1 January 2026.
For businesses, this is a reduced cost pressure for small businesses that pass taxes through to customers.
The Finance Minister, in presenting the 2026 Budget, announced that abolishing the levy will “save over GH¢3.7 billion” for Ghanaians. These savings, he says, will stay in pockets instead of flowing to government coffers. That is the value the government says will be put back into the economy in a full year after repeal.
The Fiscal Cost: Billions off the Revenue Ledger
The downside is measurable and immediate. Using the 2024 numbers as a reference point, the levy alone brought in GH¢2.94 billion in 2024, and the government had budgeted GH¢3.17 billion for that year.
Total tax collections in 2024 were about GH¢153.6 billion. That puts the 2024 levy receipts at roughly 1.9% of total tax revenue, not very huge by itself, but not negligible either.
The government’s own estimate that abolishing the levy returns around GH¢3.7 billion to consumers equates to about 2.4% of 2024 tax revenue, a gap that must be covered elsewhere in next year’s budget mix.
In short, the tax cut now becomes an annual revenue shortfall, a hole of several billion cedis that the Treasury will have to fill with spending cuts, higher collections elsewhere, or larger deficits.
How the Government Intends to Fill the Hole
In the 2026 Budget, the Finance Ministry paired the repeal with other tax changes and measures intended to nudge growth and protect revenue. For instance, the VAT reforms, raised registration thresholds, and other adjustments that, in the government’s view, will offset some of the revenue foregone while reducing “nuisance taxes.”
However, the immediate, recurring loss from the COVID-19 levy is large enough that policymakers must make trade-offs. Also, the government cannot bank all its hopes on a reform that is yet to be tested.
The Bottomline
The repeal is a two-edged sword. In the short term, households win. Consumers will see lower visible taxes on daily purchases, which puts money back in their pockets and eases price pressure.
But in the medium to long-term, public services and investment may lose out. The thousands of clinics, teachers’ salaries, road repairs, and debt obligations that depend on steady revenue flows require funding may suffer.
Policy trade-offs will show up locally. If the gap isn’t closed through growth or new revenue measures, the government could cut spending on services that impact ordinary citizens, or borrow more, with consequences for inflation, interest rates, and long-term growth.
