The mid-year budget review reduced the anticipated E-Transaction Levy (e-levy) earnings from the earlier estimate of 6.9 billion pounds to 611 million pounds.
The initial objective, which was 6.9963.386.254 in the 2022 budget paper, was revised to 611,000,000 in the budget review that Finance Minister Ken Ofori-Atta delivered to Parliament on Monday, July 25.
Value Added Tax (VAT) income expectations have been increased from the initial estimate of 14,534,864,446 to 15 402,925,770.Recall that the administration had previously said that the VAT was one of the underperforming income streams. For instance, in order to rely less on finance, Information Minister Kojo Oppong Nkrumah stated it was an issue that needed to be addressed.
The Ofoase Ayirebi politician remarked on July 6 at the 3businesscolloquium hosted by Media General that "A number of our revenue handles in this nation are not operating adequately. Take VAT. Data on VAT compliance have decreased. Those in charge of fiscal policy will tell you that occasionally raising the rate is necessary to make up for poor performance.
I concur that you must lower rates and, as we frequently advise, widen the base. To get money for the Ghana we want, however, we must reach a certain point when we exert additional pressure to bring those VAT levels into line.
"Consider home prices. We might be surprised by the results if you circulated a piece of paper across this auditorium and asked everyone how much property tax they will be paying in 2020.
"These are the facts, in all humility, that we have to face in order to raise the tax to GDP ratio from this current level of 12% to about 25%, so that you rely less on finance and lower your debt burden, but it will only address one side of the dilemma."
Analysts, including Vice President of Imani Africa Bright Simons, urged Mr. Ofori-Atta to be open and acknowledge that domestic revenue handling mechanisms like the VAT, before the Finance Minister's mid-year budget review. The corporate tax and e-levy were not operating properly.
He asserted that the Finance Minister need to acknowledge the poor performance of these revenue handles.
Mr. Simons stated, "[Ken Ofori-Atta] must also be a bit more modest and accept that the domestic programmes are not working well as they said it would, in an interview with TV3 on Thursday, July 21. Some of it will involve acknowledging the revenue handles they are referring to and their effectiveness. When it is acknowledged that some of these policy constraints, which were vehemently contested, are also having detrimental effects in addition to their underperformance, then is where I will be most interested in whether or not it is adequately honest.
"I believe that the e-effects levy's on attitudes have a cross-effect on other revenue mentions. That will begin to be seen in consumption taxes. So, some of us will be paying very careful attention to the performance of the VAT as well as the results of corporate taxes.
"We'll be watching to see if the administration acknowledges at this point that it's starting to appear less and less like it can make these judgments in good faith rather than just for show.
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