The Director of Strategy and Business Operations at Dalex Finance, Joe Jackson, says government’s silence on taxation during the 2020 Mid-year budget review presentation is worrying.
According to the Finance Minister, the double shock of the pandemic and a global economic recession, have resulted in a revenue shortfall of GH¢13.6 billion and unexpected but necessary expenditures of approximately GH¢11.7 billion.
He said the country’s total expenditures (including arrears clearance) amounted to GH¢46,352 million or 12.0 percent of GDP, compared with the programme target of GH¢41,554 million or 10.8 percent of GDP. He thus requested for a supplementary budget of 11. 8 billion Ghana cedis, to support government’s expenditure for the rest of the year towards the implementation of various initiatives to strengthen the economy.
Among other things, the Minister announced new measures such as reduction in the Communication Service tax from 9 to 6 percent and the extension of free water supply to Ghanaians for the next three months and free electricity supply to lifeline consumers for the rest of the year.
While welcoming the extension of social interventions in response to the impact of the COVID-19 pandemic, Mr. Joe Jackson told Citi Business News considering the huge drop in government’s revenue as businesses struggle; it would have been prudent for government to announce some steps to boost domestic revenue collection.
He however thinks the silence on taxation may be as a result of the fact that it is an election year.
“There is no innovative tax. There was a deafening silence about taxes, so in effect, that is what the election year effect has been that we are ready to increase expenditure, we expect revenue to drop, and yet there was a deafening silence about tax schemes” he lamented.
Various sectors of the economy had hoped the budget contains some form of tax reliefs to cushion them against the impact of the coronavirus pandemic on their businesses.
The Ghana Union of Traders Association (GUTA) for instance had wanted government to widen the country’s tax net to capture many more businesses to boost revenue generation.
Parliament has said it will take the request from government for a supplementary budget through three days of scrutiny before approval, according to the Majority Leader, Osei Kyei Mensah-Bonsu.
“Deliberations will begin on Monday 27th of July, 2020, and conclude on Tuesday, 28th July, 2020. If there is enough space, we will wind up with deliberations on Wednesday 29th July. The House may have to sit for longer next week to arrive at a conclusion”.