Tax expert advocates modification to COVID-19 Levy

  • to support ailing health sector

Despite calls to scrap a number of tax handles, Dr. Ali Nakyea believes the COVID-19 Health Recovery Levy should be maintained – however, with modifications to its name as well as its intended use.

Introduced in 2021, the levy is a stand-alone tariff applied to the gross value of taxable supplies of goods and services provided under the Standard Rate and VAT Flat Rate Schemes, “to support COVID-19 expenditures and to provide for related matters”.

In his view, beyond the fiscal considerations for introduction of the levy, peculiar challenges in the health sector demand that a dedicated tax handle for the sector be in play.

Responding directly to a question on the subject at the Vodafone Business Runway 2023 in Accra, he said: “The reason I am saying this is that supposing we scrap the COVID-19 Levy today, with the challenges that Korle-Bu is facing, are we going to introduce a dialysis levy?

“The name given to it might have been the issue, but with the challenges we are facing in the health sector, any revenue should be channeled to solve them,” the tax expert added.

The suggestion has gained attention as news broke out that the Renal Dialysis Unit of the Korle Bu Teaching Hospital had recently increased the cost of renal dialysis from GH¢380 to GH¢765.42 per session. The decision has since been rescinded following a public backlash – and as it emerged that it was not sanctioned by the hospital’s management or approved by parliament.


At the event, which formed part of Vodafone’s SME month and had the theme ‘Good to great with Vodafone – innovate, comply and expand’, Dr. Nakyea, suggested that, alternatively, revenue from the handle could be funnelled to support SMEs producing sanitary pads, for instance.

“If we all saw how much has been raised from the COVID-19 Health Levy and how much of it has been used and what it has been used for; we can all say that it stays but the name changes. Couldn’t these revenues be channeled to SMEs that produce sanitary pads and cut down on our import bill?” he queried.

He expressed need for a dialogue, highlighting the ongoing issue of insufficient stakeholder involvement. He emphasised that before introducing any tax policy it is essential to actively involve stakeholders, including taxpayers. This approach allows for the development of a taxation system that benefits everyone, as taxes are meant to serve the collective interest.

The state has come under fire in recent times for its seeming lack of stakeholder engagement when introducing the E-Levy as well as the Growth and Sustainability Levy.

Accountability and happiness

The Board chair of Access Bank, Ama Bawuah, was of the opinion that increased accountability will provide the much-needed impetus for broader tax participation.

“In certain jurisdictions, like in Scandinavia, their tax rate is almost 50 percent – but they have the happiest people on earth, they live long and don’t complain simply because of the accountability. Where do the taxes go? What are they used for? They have the best roads. Most people don’t even own cars, they ride bicycles everywhere. They have social support structures; every little neighbourhood has a social centre where people can go and be entertained, and its paid for by their taxes,” she said.

“I don’t think it is about us paying taxes. It is about the impact. If we are driving on beautiful roads and you ask me to pay 70 percent of my money as taxes to have good hospitals, roads and other amenities, it would not be a problem,” she further stated.

The average tax rate globally is 31.37 percent, the European average is 32 percent and the OECD average is 41.58 percent. However, in the Nordic countries tax rates are higher – with Denmark at 55.56 percent, Finland at 51.25 percent, Iceland at 46.22 percent, Norway at 47.2 percent and Sweden at 57 percent.

Finland, Denmark and Iceland are categorised as the three ‘happiest’ countries in the world, with Sweden and Norway seventh and eighth respectively in 2022, according to the United Nations (UN) World Happiness Report.

Conversely, Ghana – with an average income tax rate of 25 percent, was ranked 111th of the 150 countries on the list.

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