Business News of Saturday, 25 January 2020
Source: www.ghanaweb.live
2020-01-25Re-introducing scrapped taxes not the only way to raise revenue – Economist tells IMF
play videoDr. Adu Owusus Sarkodie, Lecturer at the University of Ghana Economic Department
Lecturer at the University of Ghana Economic Department, Dr. Adu Owusu Sarkodie, says the re-introduction of the country’s abolished taxes is not the only way to shore up revenue.
This was his reaction to calls by the International Monetary Fund (IMF) calls on Ghana to re-introduce taxes it scrapped due to low yielding effects.
The Finance
Read full articleMinister Ken Ofori Atta presenting his first budget in March 2, 2017 said a number of tax measures were introduced in an attempt to deal with revenue shortfalls but had proven to be nuisance taxes and have no revenue yielding potential and at the same time impose significant burden on the private sector and the average Ghanaian citizen. This brought about tax scrapping.
The IMF recently told the government to Ghana to reinstate some abolished taxes and expand some existing ones in order to meet its short-term revenue projections.
The Board of the Fund in its recent report on Ghana stated that government must consider urgent tax measures like the reintroduction of the controversial 17.5 percent VAT on financial services to overcome perennial tax shortfalls.
Speaking to Ghanaweb’s Desmond Frimpong, the economist re-iterates the need to assess the impact of the abolished taxes before considering re-introducing them.
He explains that, “the government in its budget statement said, it abolished taxes it scrapped because of their low yielding effect. However, it will be preposterous to just introduce them if you do not run a cost benefit analysis.”
The public debt stock as at September 2019 was pegged at GH¢208.6 billion, equivalent to 60.3 per cent of the country’s gross domestic product (GDP), data from the Bank of Ghana revealed. The 2020 budget sets aside over GH¢19bn to pay interests alone and is one of the biggest items on the government’s expenditure bill.
On the back of the rising debt, the economist says, “I want the government to run a balanced budget where we will not be thinking of budget deficit or run a surplus budget. Currently our debt is very huge and it will not be advisable for government to keep borrowing at higher rate. Tax payment is a way to raise revenue locally.”
“Although our Gross Domestic Product has increased, we should be circumspect whether or not scrapped tax will be introduced,” he added.
