In a significant move aimed at reducing the financial strain on citizens and businesses, the Ghanaian government has announced the removal of five “nuisance taxes” as part of the 2025 national budget. This decision, presented to Parliament on Tuesday, March 11, 2025, by Finance Minister Dr. Cassiel Ato Forson, is seen as a fulfillment of the government’s manifesto promise to create a more business-friendly environment and enhance household disposable incomes.
Dr. Forson explained that while the government remains committed to increasing non-oil tax revenue by 0.6 percentage points of GDP under the ongoing IMF-supported program, removing these taxes will boost economic activity, support businesses, and encourage tax compliance.
The five taxes to be abolished include:
1. The 10% withholding tax on lottery winnings (Betting Tax): This tax, imposed on lottery and betting earnings, had been a point of contention, particularly among young Ghanaians.
2. The 1% Electronic Transfer Levy (E-Levy): The unpopular levy, introduced to tax digital financial transactions, had faced widespread criticism since its inception.
3. The Emission Levy on Industries and Vehicles: This levy was charged to curb emissions but added to the operational costs of businesses and vehicle owners.
4. The VAT on motor vehicle insurance policies: Its removal is expected to reduce the cost of insuring vehicles, making transportation more affordable.
5. The 1.5% withholding tax on unprocessed gold earnings by small-scale miners: A burden on small-scale miners, this tax will now be scrapped to support the mining sector.
“These measures are designed to ease the financial pressure on households and create a more conducive environment for business growth,” Dr. Forson emphasized.
Beyond tax reforms, the Finance Minister also addressed critical governance issues, particularly the misuse of the Tax Refund Account. Over the past eight years, a staggering GHS16.6 billion—representing 57% of funds allocated for tax refunds—was misapplied, in direct violation of the Revenue Administration Act, 2016 (Act 915), and the Public Financial Management Act, 2016 (Act 921).
To curb future misuse, the government will reduce the tax refund ceiling from 6% to 4% of total revenue, as stipulated under Section 69 of the Revenue Administration Act. This adjustment, Dr. Forson explained, will ensure better fiscal discipline while prioritizing funds for genuine tax refunds.
The removal of these taxes signals a shift in the government’s economic approach, focusing on stimulating economic activity, improving disposable incomes, and rebuilding trust between citizens and the state. Economic analysts are optimistic that these measures will have a positive ripple effect across various sectors, including finance, transport, and small-scale mining, driving growth in the years ahead.
Story by: Mercy Addai Turkson #ahotoronline.com
