2018 Mid-year budget review: Govt adopts revenue mobilisation strategies … to raise fund to sustain macroeconomic gains

Mr Ken Ofori-Atta (inset) presenting the budget statement

Mr Ken Ofori-Atta (inset) presenting the budget statement

Persons who earn more than GH¢10,000 a month will have to pay more tax as government seeks to raise more revenue to finance the budget.

Also, individuals who imports vehicles with an engine capacities of 3.0 litres would pay more tax yet to be determined by Parliament.

The Minister of Finance, Ken Ofori-Atta who announced this in Accra, yesterday when he presented the Mid-Year Review of the Budget Statement and Economic Policy of the government for the 2018 financial year, said, the move had become necessary to shore up government revenue as its revenue sources continue to dry up.

The presentation of the Mid-Year budget by the Finance Minister to Parliament is in line with Public Financial Management  Act 2016, Act 921  which states that the “the Minister  shall,  not later than 31 of July each financial year,  prepare and submit to Parliament a Mid-Year Fiscal Policy review.”

The Minister explained that Personal Income Tax for individuals who earn more than GH¢10, 000 had been increased from the current 25 to 35 per cent and the National Health Insurance Levy of 2.5 per cent had been converted to a straight tax of 2.5 per cent to raise more funds to finance the National Health Insurance Scheme.

The Minister of Finance explained that the revenue mobilisation strategies being pursued by the government was carefully thought out and was meant to sustain the macroeconomic gains made and not throw the economy out of gear.

However, contrary to speculations by a section of the public that the Value Added Tax (VAT) will be increased from 17.5 to about 21 per cent, Mr Ofori-Atta said VAT had been maintained and urged the Minority in Parliament to desist from basing their economic arguments on information from social media.

Also Corporate and Special Petroleum Tax have been maintained by the government to give some financial respite to the private sector and relief to the citizens.

Mr Ofori-Atta opined that government in the coming months would shift its attention on tax compliance, commodity swap and the control of expenditure as its revenue sources continue to dry up.

Particularly on tax compliance, he said the Ghana Revenue Authority had initiated moves to prosecute individuals and organisations which evade tax and would step monitoring to ensure that persons who are supposed to pay tax do so.

“The GRA will intensify audit activities on withholding Taxes, VAT, Rent Tax to ensure compliance,” he said.

According to the Minister, the current government had worked hard to stabilise the economy and put it back on the track of growth.

“Government is making significant strides in establishing a strong and prudent macroeconomic and development agenda on a solid foundation.  We are confident we are now well established on a sustainable growth path,” he said.

He said the economic strategies and policies initiated by the government were beginning to yield positive results and had put the economy on the path of strong macroeconomic fundamentals.

Mr Ofori-Atta said the real Gross Domestic Product for the first quarter of the year grew by 6.8 per cent, compared with 6.7 recorded in the first quarter of 2017, and also headline inflation had been reduced from 15.4 per cent in December 2016 to 9.8 in May 2018.

“The gross public debt in nominal terms stood at GH¢154 billion ($32 billion) as at the end of May 2018, representing 63.8 per cent of GDP compared to 66.8 per cent in same period in 2017,” he said, indicating that it was the best performance since 2007.

In view of the drying sources of government revenue, government has reviewed its 2018 expenditure downwards from GH¢62 billion to GH¢61.6 billion, and total revenue and grants had been revised to GH¢50.7 billion from GH¢51.04 billion.

By Kingsley Asare and Julius Yao Petetsi

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