Ghana’s new Government has announced the removal of several COVID-era taxes, which were introduced as part of an effort to secure financing from the International Monetary Fund (IMF).
Finance Minister Cassiel Ato Forson unveiled the decision in the 2025 budget, citing the economic strain these taxes had placed on ordinary citizens. Among the cancelled levies are a one-percent tax on mobile money transfers, a VAT on motor vehicle insurance, a 10-percent tax on lottery winnings, and taxes on unprocessed gold and emissions from industries and vehicles. These taxes were originally implemented by the previous government as part of a strategy to secure a $3 billion bailout from the IMF.
While the government argues that removing these taxes will provide much-needed relief to citizens struggling with high inflation and a depreciating currency, concerns have quickly emerged regarding how the lost revenue will be replaced. Ghana’s economy is still grappling with a significant debt burden, fiscal mismanagement, and other economic challenges. Forson has assured lawmakers that the government will introduce alternative measures to boost tax collection, such as amending the Revenue Administration Act and enhancing road toll collection as part of the “Big Push” infrastructure initiative. However, economists warn that these efforts may not be enough to offset the revenue gap created by the tax cuts.
The IMF has expressed concerns over the sustainability of Ghana’s fiscal position, especially as the country continues to face challenges in improving its revenue collection while managing a growing fiscal deficit. Ghana’s economic crisis, marked by mounting arrears, energy sector financing shortfalls, and risks from the cocoa and financial sectors, prompted the country to seek IMF support in the first place. While the removal of taxes may ease the burden on citizens and businesses in the short term, the IMF has urged the government to focus on comprehensive fiscal reforms to ensure long-term economic stability.