Businesses in Ghana are growing increasingly concerned that governments consistently fail to honour the timelines set for temporary levies. These levies, introduced to address short-term challenges, often remain in place long after their supposed end date. Instead of allowing these levies to expire as promised, the government extends them or reintroduces them under a different name in subsequent budgets.
A sunset clause, by definition, is a provision in a law that ensures it will expire on a specific date unless further legislative action is taken to extend it. However, in Ghana, many of these clauses have been repeatedly extended, preventing the “sun” from ever setting on these taxes.
A prominent example of this is the National Reconstruction Levy Act of 2001 (Act 597), introduced by President John Agyekum Kufuor to temporarily address revenue shortfalls. Initially meant to last a few years, the levy was amended and stayed in place until 2007. It was later reintroduced by President Evans Atta-Mills under a new name -the National Fiscal Stabilization Levy Act of 2009 (Act 785). Although repealed in 2011, it resurfaced again in 2013 under President John Mahama and remained until 2022, when it was replaced by another new name-the Growth and Sustainability Levy Act of 2023 under President Akufo-Addo. Initially set to expire in 2025, it has now been extended again to 2028 under the 2025 budget.
Policy Inconsistency and Its Negative Impact
The repeated extension of sunset clauses and the reintroduction of supposedly temporary levies create significant challenges for businesses. These policy inconsistencies make it difficult for companies to plan for the medium and long term, as they cannot rely on the government’s timelines. More critically, this lack of follow-through damages trust in the government, making it difficult for businesses to take the government at its word. Such unpredictability discourages potential investors, who may choose to invest elsewhere where policies are more stable and predictable.
Seth Akwaboah, Chief Executive Officer of the Association of Ghana Industries (AGI), expressed his frustration at an Economic Dialogue organized by Deloitte. He highlighted that Ghana seems to be a country where “the sun never sets” on sunset clauses, a comment that drew laughter but carried serious implications. Mr. Akwaboah emphasized that this trend undermines businesses’ ability to plan effectively and erodes confidence in government commitments.
The frequent amendments to these levies also often result in expanding their scope to include more sectors or increasing the tax burden. This further compounds the problem, as businesses face unexpected financial strains that disrupt their operations.
Businesses and industry leaders, like Seth Akwaboah, are calling for greater consistency and a commitment to honouring these clauses as originally intended. Without this, Ghana risks driving away both local and international investors, hampering economic growth and development.
