According to the fund, the government must consider urgent tax measures like the reintroduction of the controversial 17.5 percent VAT on financial services to overcome perennial tax shortfalls.
International Monetary Fund wants the Ghanaian government to introduce more taxes to plug revenue shortfall
The International Monetary Fund (IMF) has directed that government of Ghana to reinstate some abolished taxes and expand some existing ones in other to meet its short-term revenue projections.
IMF said this in its report for Ghana this 2020.
The report said, “New taxes that can expand the taxable base include a VAT of 17.5 percent on financial services; a tax increase on communication services from 9 percent to 12 percent; the expansion of the national fiscal stabilization levy on all firms; the minimum chargeable income; and the reintroduction of the high-income tax rate of 35 percent.”
The Fund added that the short-term revenue measures could immediately yield up to 0.8 percent of GDP while the new taxes could yield 0.25 percent of GDP, while compliance could bring around 0.5 percent of GDP.
Over the past two decades, Ghana’s tax ratio has remained around 13 percent which is below sub-Saharan Africa’s average of 15 percent. With the government targeting to raise the tax output to 18 percent of GDP by 2023, the Fund believes that certain measures would have to be taken.
One of the urgent measures includes a review of the import duty benchmark— which the Fund stated that has not generated the expected increase in imports through trade diversion to Ghana ports — and collect around half of the tax liability of around $800 million in the oil sector in 2020.
The Finance Minister last year announced that the government will mobilize at least GH¢65.8 billion in domestic revenue this year given the several reforms it has undertaken in the past 12 months.
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