Economist Urges Mahama to Fulfill Tax Promises While Managing Expectations
President-elect John Dramani Mahama must fulfill his campaign promises to abolish specific taxes, including the Electronic Levy (E-levy), according to economist Professor Stephen Adei. While Prof. Adei expressed a preference for retaining the E-levy with modifications, he acknowledged that Mr. Mahama is bound by his commitments to the Ghanaian electorate.
Speaking on TV3's Hot Issues on Sunday, December 22, the former Rector of the Ghana Institute of Management and Public Administration (GIMPA) called for a comprehensive review of Ghana’s tax system. There should be a total tax review. There are too many taxes, Prof. Adei stated. Citing an example, he said, I imported something and saw about 21 taxes on our car import; that is ridiculous. We need a complete overhaul to identify taxes that are easier to collect and more effective in broadening the tax base.
Prof. Adei highlighted Ghana’s limited tax base, with only about one million people out of 33 million paying income taxes. He suggested that property taxes, which are easier to enforce, should be prioritized over levies like the E-levy. Property taxes are unavoidable because you cannot put your house in your pocket. Local governments, especially in areas like Accra, should focus on collecting property rates rather than relying on central funding, he explained.
Regarding the E-levy, Prof. Adei argued that it should be reconsidered, rather than scrapped outright. In tax administration, if it costs more to collect than what you gain, you better forget it. I would prefer reducing other taxes and keeping the E-levy in a revised form, he said. However, he conceded that the president-elect has no choice but to remove it as promised.
Ahead of the 2024 elections, Mr. Mahama and the National Democratic Congress (NDC) pledged to abolish several taxes within 100 days of assuming office. These included the E-levy, the COVID-19 levy, a 10% betting tax, emissions levy, and import duties on vehicles and equipment for industrial and agricultural purposes.
Prof. Adei also called for a significant increase in betting taxes, proposing a jump from 10% to 50%. As a father and Christian leader, I see betting as a destructive habit. Globally, sin taxes like those on cigarettes and alcohol are high for this reason. Betting taxes should be no different, he remarked.
He further advised Mr. Mahama to manage public expectations effectively, learning from the perceived failure of the outgoing Akufo-Addo administration in this regard. One of Akufo-Addo’s downfalls was his inability to manage expectations. This should be a warning sign to Mahama, Prof. Adei cautioned, emphasizing that expectations management is critical for any successful administration.
Prof. Adei’s comments underscore the delicate balance the president-elect must strike between fulfilling campaign promises and addressing the practical realities of governance.
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