Economist Dr. Owusu Adu Sarkodie has weighed in on the feasibility of the proposal put forth by the NPP flagbearer, Dr. Mahamudu Bawumia, to eliminate specific E-Levy and other taxes if elected president.
Dr. Bawumia outlined this ambitious initiative, among other plans, during his vision statement delivery in Accra, expressing his intent to abolish taxes such as the E-levy, emissions tax, VAT on electricity, and the betting tax. Speaking on The Big Issue with Nana Tuffuor Boateng, Dr. Adu-Sarkodie remarked that Dr. Bawumia’s proposal reflects a thoughtful consideration of the concerns raised by Ghanaians. He acknowledged the NPP government’s prior tax abolishment in 2017 but emphasized the necessity of a contingency plan to address potential revenue losses, a component he believed was lacking in previous tax abolition efforts.
In a significant development, the government has officially halted the planned implementation of the 15% Value Added Tax (VAT) on domestic electricity consumption. The Ministry of Finance issued directives to the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to cease charging the levy. This suspension aims to facilitate comprehensive dialogue and solicit input from industry stakeholders and labor unions due to concerns regarding its impact on consumers and businesses alike.
The decision to suspend the implementation of the VAT on domestic electricity consumption underscores the government’s responsiveness to public concerns and its commitment to fostering inclusive decision-making processes. By pausing the levy’s charging, authorities seek to engage stakeholders in constructive discussions to address apprehensions and ensure that any taxation measures implemented are fair and equitable. This proactive approach reflects a recognition of the importance of balancing fiscal considerations with the welfare of citizens and the broader economy, underscoring the government’s dedication to responsible governance and stakeholder engagement.
I think that they have done something similar before. In 2017 when they came, we were still under an IMF programme and they still abolished many taxes. What we didn’t see in that budget was a contingency plan to make sure that the government doesn’t lose on revenue generation. So I think they may have learnt from their mistakes and that even if they succeed to abolish the taxes they must have a contingency plan so that we can raise enough revenue.
So yes it is feasible. It shows that they have listened to Ghanaians. I listened to the GUTA president and he was so happy about the speech because he said that these are the very things they have been asking the government to do for them. So with respect to having an efficient tax regime which comes with a flat rate and compliance, etc. I was also happy that Dr Bawumia listened to a number of Ghanaians who called for the abolishment of E-levy. He remarked.
