Collective effort required to save economy from COVID-19 scourge –  Ofori-Atta

Gov’t to roll out six major expenditure cut measures
Ken Ofori-Atta is Finance Minister

New/Revised Taxes

The Minister of Finance-designate, Ken Ofori-Atta, has said the main motive behind the introduction of new taxes and adjustment of existing ones is to ensure that a collective effort is adopted in fighting the impact and economic scourge of the COVID-19 pandemic.

According to him, the new and adjusted taxes were carefully crafted so that almost every sector of the economy and every Ghanaian contributes to some revenue stream that will be used in supporting economic revitalisation through completion, consolidation and continuity of projects and programmes.

The budget saw the NHIS, VAT flat rate increased by 1 percent each, and the introduction of a new sanitation and pollution levy. Fuel prices are to go up by some 5.7 percent, banks will be paying 5 percent extra income tax, while revision of road tolls and a new gaming policy are in the offing.

Speaking at a post-budget forum organised by PricewaterhouseCoopers (PwC), Mr. Ofori-Atta said: “The whole issue of the ‘won ya wohia’ budget is really to rally all of us around as a country, to say what are we all going to be doing to make sure that COVID does not sink us.

“While at it, the battle-cry for transformation is also not forgotten because we are always trading growth and consolidation; but we must grow and we must do it deliberately, and it is our responsibility as a people to do that. I think that is what the president is looking at.”

He intimated that the budget was anchored on the principle of shared responsibility, pushing everyone to contribute a little to economic resuscitation. “We have sort of anchored this around debt sustainability, particularly looking at the medium-term deficit getting back into 5 percent and ratcheting it up in terms of revenue in a way that impacts everybody but everybody contributes to that; and that has been the structure in which we chose to move.”

Explaining the rationale behind the taxes mentioned in the budget. Mr. Ofori-Atta said: “We do have issues of sanitation, the debt fund for energy and other issues that need to be tackled. As a result, the petroleum taxes are supposed to contribute to that.

“Then we have the 1 percent on VAT, which essentially is looking at making sure we are able to pay for the vaccines and get our people working so that we don’t have a lockdown. Also, it will help with Agenda 111 so that the infrastructure for our health care will be a lot more robust,” he said.

Touching on the financial sector’s increased taxes, Mr. Ofori-Atta added that: “We have seen the sector’s robustness over the past three to four years, and therefore roping them in on their part is a shared burden philosophy. This is being done so that, at the end of the day, we all as a people recognise the enormity of the problem we have”.

He further added that the ministry will also want to have strong collaborations with players in key revenue sectors to seal all leakages and shore-up government revenue. “Who is it that is doing it? You know it more than I do, and can we form a group to ensure that whatever happens is the responsibility of all of us as a people to fix it?

“The financial sector, in like manner, we watched as our people broke the rules; but these associations should be strong enough and have the moral authority to begin saying ‘this will affect our bottom line’, so that we work at dealing with it.”

Touching briefly on challenges, Mr. Ofori-Atta said government is aware lack of efficiency and leakages in revenue streams is affecting it – the reason its digitalisation agenda will be intensified in the coming years with an aim of increasing Revenue to GDP to at least 20 percent. “It is an incredible period of renewal for we as Ghanaians, looking to fight to get our economy back to where it was or where it should be going,” Mr. Ofori-Atta said.

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