It is emerging that one of the effective strategies the new government can deploy to fight the persistent food inflation in the country is through reforming the tax exemptions and waivers regime.
Ghana has been grappling with inflationary pressures as Ghanaians continue to experience a rising cost of living crisis with low-income earners and vulnerable groups being the most affected. This inflationary pressures, the Ghana Statistical Service’ data reveals is mainly driven by food inflation inflation.
For instance, 2024 end-year inflation figures published by GSS indicate that while the national inflation for December was 23.8%, food inflation alone was above the headline inflation recording a rate of 27.8%. Non-food inflation, however, recorded a smaller rate at 20.3%. A trend analysis between September 2022 and December 2024 by The High Street Journal using data from the GSS confirms food inflation, with the exception few months, has always been the driver of inflation, a trend showcasing the impact of food inflation over time.
Author-generated with GSS data
With the significant negative impact of food inflation on the incomes of Ghanaians, Financial Analyst, Dr. Richmond Atuahene says an effective means to bring down inflation is to tackle food inflation. He tells The High Street Journal that tax waivers and exemptions are some effective means to address this cost of living threat when properly directed towards the country’s agricultural value chain.
The financial analyst argues that the current tax exemptions and waiver regime, which offers charitable exemptions to “non-essential” sectors under what he describes as a “frivolous free trade zone arrangement”, has no significant impact on the average Ghanaian. He cannot fathom why items like steel and iron receive major exemptions while prices of necessities as important as food continue to rise without any significant governmental intervention.
“Government under resetting agenda must consider tax exemptions and waivers in the agricultural value chain instead of those producing iron and steel under current frivolous free-trade zones arrangement,” he indicates. Addressing food inflation should be a priority for the government.
He is therefore suggesting that the tax exemptions regime must be redirected to the agricultural value chain to address the inherent challenges leading to the ever-increasing food prices.
Ghana, a major agricultural economy is not food sufficient due to challenges in the agricultural value chain such as the dependence on unreliable rainfall patterns despite the vast arable land, scarcity of human and natural resource management, technological deficit, infrastructural and market access challenges among others.
“Ghana produces 51% of its cereal needs, 60% of fish requirements, 50% of meat, and less than 30% of the raw materials needed for agro-based industries. Production of roots, tubers, and vegetables such as tomatoes and onions, the most widely used staple food crops, is rather erratic and vacillates between scarcity, sufficiency, and glut, depending on the vagaries of the weather,” Dr. Atuahene laments. The impact of food inflation varies across different food categories.
He is convinced that redirecting tax incentives to the agricultural value chain will potentially improve food production, lower food prices, enhance food security, and reduce poverty levels. Such an action, Dr. Atuahene believes would directly impact and improve the lives of ordinary Ghanaians.
As the new government has commenced its resetting agenda, the financial analyst’s suggestion is expected to be considered in order to create a thriving agricultural sector that would provide employment opportunities and contribute to economic growth, enhancing Ghana’s chances of becoming a self-sufficient nation and mitigating the effects of food inflation.
