Economist Dr Adu Owusu Sarkodie says the government’s decision to abolish the Covid-19 levy will wipe out one of its strongest revenue streams and force a risky dependence on tax compliance in 2026.
Speaking on Joy News’ PM Express Business Edition, he said government is removing three major taxes at once, even though each contributed significantly to national revenue.
“In 2026 government is putting its hope on compliance,” he said, noting that the administration has already scrapped the E-Levy, which “was fetching the government around a little over ¢2 billion.”
He added that the betting tax, which was bringing in “roughly about ¢300 million,” is also gone. Now the Covid-19 levy, expected to “rake in about ¢3 billion next year,” has also been abolished.
Dr Sarkodie said the Covid-19 levy alone had become as important to government revenue as Ghana’s oil and gas royalties.
“Covid-19 was giving us almost the same amount as the total royalties from oil and gas. This year, total royalties from oil and gas are estimated to be ¢2.9 billion. Covid-19 levy will be giving us ¢2.8 billion.”
He warned that removing all three taxes will significantly reduce revenue.
“You’ve taken e-Levy ¢2 billion, we are going to take away the Covid-19 levy, another close to ¢3 billion. That’s about ¢5 billion. So that will bring down your revenue.”
However, he explained that government is convinced it can replace the revenue loss through increased compliance across the tax system.
“But the government is saying that you can raise revenue. You can increase revenue by even abolishing taxes or reducing tax rates. When you increase the base, if more people are paying, it’s better than a few people paying higher rates.”
He said government believes that lowering taxes will draw more Ghanaians into the tax net.
“So this government believes in bringing the rate down so that you get more people into the basket or the bracket to pay. That’s how they want, so it really focuses on compliance.”
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