Planned tax abolitions should be compensated by measures to plug loopholes — Dr John Kwakye

Dr. John Kwakye, the Institute of Economic Affairs (IEA) Director of Research, has advocated for actions to close tax gaps and improve tax administration in order to make up for the proposed tax eliminations.

Some taxes, like the 10% withholding tax on winnings from bets, must be kept in place to safeguard the nation's revenue base, the economist said.

He, however, argued that the COVID Tax, Emissions Tax, Growth and Sustainability Tax, and the electronic transaction levy (E-Levy), could be eliminated without negatively impacting the economy.

On Tuesday, February 11, Dr. Kwakye warned against repealing the betting tax in a social media post, calling it suicidal and financially foolish.

“Betting will become an increasing part of the economy with a huge tax revenue potential. Leaving betting untaxed would, therefore, be fiscally ill-advised and, indeed, suicidal!

“Planned tax abolitions should be compensated by measures to plug tax loopholes, broaden the tax net, strengthen tax administration, and stem tax evasion. Also, natural resource receipts should be fully exploited,” he wrote.

He further suggested that the government must seriously explore an e-commerce tax to boost revenue.

Meanwhile, Finance Minister Dr. Cassiel Ato Forson disagrees, stating that the betting tax, which generates less than GHC 50 million annually, has minimal economic impact.

During his vetting by Parliament’s Appointments Committee on January 13, Dr. Forson argued that scrapping the tax would not harm the economy. He described the tax as a “nuisance” that does little to support the country’s finances.

“Some of the taxes are not bringing in any revenue that you should [increase]. For example, the betting tax is bringing in less than GHC 50 million a year. It’s a nuisance tax, and scrapping GHC 50 million will not mean anything in a way that will affect the economy,” he stated.

This position aligns with a campaign promise by President John Dramani Mahama, who pledged to abolish the betting tax if elected in the 2024 general elections.