Expected revenue from the E-Transaction Levy (e-levy) has been revised downwards from the initial ¢6.9billion as stated in the 2022 budget statement to ¢611million in the mid-year budget review.
The initial target as stated in the 2022 budget document was ¢6,963,386,254 but was readjusted in the budget review submitted to Parliament by Finance Minister Ken Ofori-Atta on Monday, July 25 to 611,000,000.
Regarding Value Added Tax (VAT) the expected revenue has been adjusted upwards from the initial ¢14,534,864,446 to ¢15,402,925,770.
It is recalled that the government earlier indicated that a number of the revenue handles including the VAT were underperforming.
For instance, Information Minister Kojo Oppong Nkrumah said that was a situation that should be confronted in order to rely less on financing and also reduce the debt burden.
Speaking at the 3businesscolloquium organized by Media General on Wednesday July 6, the Ofoase Ayirebi lawmaker said “A number of our revenue handles in this country are not performing optimally. Take VAT. VAT compliance, the data has gone down. Those who manage fiscal policy will tell you that sometimes, they have to compensate for the nonperformance by hiking up the rate.
“I agree that you have to ensure that the rates are down, like we always say, broaden the base. But we have to come to a certain point where we push more to get those VAT numbers where they ought to be, so that we can get funding for the Ghana we want.
“Take property rates. If you were to send the piece of paper round this auditorium to ask everybody how much property rate did you pay in the year 2020, we may be amazed at the data we are getting.
“These are the realities, in all humility, that we have to confront to move tax to GDP rate from this 12 per cent to about 25 per cent, so that you rely less on financing and reduce your debt burden but that will deal with only one side of the challenge.”
Ahead of the mid year budget review by the Finance Minister, analysts including Vice President of Imani Africa, Bright Simons asked Mr Ofori-Atta be candid and admit that domestic revenue handles such as the VAT, the e-levy and Corporate Tax, were not working as they should.
He said the Finance Minister should admit that these revenue handles are underperforming.
Speaking in an interview with TV3 on Thursday, July 21, Mr Simons said “[Ken Ofori-Atta] must also be a bit more humble and admit that the domestic programmes are not going well as they said it would. Some of that will be an acknowledgement of revenue handles that they are talking about and their performance. Where I will be most interested in whether or not it is sufficiently candid is admitting that some of these policy restrictions that were fiercely resisted are also having negative effect, not just they are underperforming.
“I think that e-levy has a cross effect on other revenue mentions because of its impacts on sentiments. We are going to start seeing that in Consumption Taxes. So some of us will be looking very closely at VAT and its performance, we will be looking very closely at Corporate Taxes and its out turn.
“We will be looking to see whether the government recognizes at this stage that it is beginning to lose credibility as being capable of taking these decisions in good faith or simply posturing.
“I think that is the biggest issue facing the government now. If investors get the view that they are just posturing, they don’t tend to do things fundamentally different, they will not be able to achieve their most important policy objectives right now which is to reduce the cost of our debt. If they don’t bring down the international rate it will affect everything else. This 20 per cent yield, 22 per cent yield moving to 25 per cent yield is moving the country aggressively towards a duration where we have a default,” he said.