Parliament to decisively vote on three new Tax Bills today

Parliament to vote on three new Tax Bills today

The Ghanaian parliament is set to vote on several revenue mobilization bills today, including the Income Tax (Amendment) Bill, Excise Duty and Excise Tax Stamp (Amendment) Bills, and the Growth and Sustainability Levy Bill.

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The bills are necessary for effective budget implementation and increasing the country’s tax-to-GDP ratio from less than 13% to the sub-Saharan average of 18%. Approval of these bills is required for the $3 billion International Monetary Fund (IMF) Programme staff-level agreement to be given.

The government has already completed four out of five agreed Prior Actions in the Staff Level Agreement, which includes the tariff adjustment by the Public Utilities Regulatory Commission, publication of the Auditor-General’s report on COVID-19 spending, and onboarding of various funds on Ghana’s integrated financial management information system (GIFMIS).

The Director of Revenue Policy Division of the Ministry of Finance, George Swanzy Winful, explained that the Growth and Sustainability Levy is a temporal measure to raise revenue for growth and fiscal sustainability of the economy. This is necessary to bridge the financing gap created by COVID-19 and the Russia-Ukraine war.

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The levy replaces the National Fiscal Stabilisation Levy (NFSL) and will apply to all companies, rather than just the 11 companies previously charged under the NFSL. If the bills are not passed, the government will be forced to review revenue estimates, which will have serious consequences on public funds.

The Income Tax (Amendment) Bill, 2022, is aimed at revising the rates of income tax for individuals and introducing an additional income tax bracket. It will also introduce a withholding tax rate on the realisation of assets and liabilities and on winnings from the lottery, unify the loss carried forward provisions and revise the treatment of foreign exchange losses.

The Excise Duty (Amendment) Bill, 2022, aims to revise excise tax rates for cigarettes and other tobacco products to conform with the Economic Community of West African States (ECOWAS) Protocols and raise revenue to mitigate the harmful effects of these excisable products. The Bill will also impose excise duty on sweetened beverages and electronic cigarettes and liquids.

The amendments to the income tax and excise duty laws are considered necessary to support the growing economy and will lead to a revenue yield of approximately GH₵1.290 billion. The international and domestic bond markets are shut for the financing of government programmes, forcing the government to rely on Treasury Bills and concessional loans as the primary sources of financing for the 2023 fiscal year. Therefore, approval of these fiscal measures by Parliament is critical for recovery from the current economic crisis.

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