Gideon Boako: Government’s Proposal to Scrap E-Levy and Betting Tax Contradicts IMF Agreement
Dr. Gideon Boako, the Member of Parliament for Tano North, has expressed serious concerns about the potential implications of the government’s plan to abolish the e-levy and betting tax, suggesting that such actions could contradict Ghana’s fiscal commitments under its agreement with the International Monetary Fund (IMF).
His comments come in response to statements made by Dr. Cassiel Ato Forson, the Finance Minister-designate, who indicated that the incoming Mahama administration intends to remove these taxes as part of its first budget. In an effort to make up for the revenue shortfall caused by the removal of these taxes, Dr. Forson suggested that the government would implement expenditure cuts. However, Dr. Boako questioned how these moves would align with Ghana’s fiscal policies that have been negotiated with the IMF.
Speaking to Citi News, Dr. Boako raised doubts about whether the government’s plan would fit within the parameters set by the IMF agreement. According to him, the proposed tax cuts could undermine Ghana’s financial stability and disrupt the country’s efforts to stay on track with its fiscal commitments. He specifically warned against replacing the revenue lost from scrapping the e-levy and betting tax with new taxes, which could potentially violate the agreements that the government made with the IMF.
Dr. Boako stressed that the government must be transparent and clear about its fiscal intentions. “We don’t want a situation where you give with your left hand and take with your right hand,” he explained. “They need to be explicit. If they are cutting taxes, they need to stick to the promise and not introduce new taxes to make up for the lost revenue.”
The MP further expressed concern that the government’s approach could lead to the introduction of new taxes in a manner that would not be transparent or in line with the country’s financial obligations. If the government proceeds with the tax cuts, he suggested, there could be a hidden or indirect imposition of new taxes designed to fill the revenue gap. According to Dr. Boako, such a move could potentially violate the debt sustainability framework and the IMF programme.
“If they truly want to scrap the e-levy, betting tax, and COVID-19 taxes, the only way they can meet the debt service-to-revenue ratio, as required by the IMF’s debt sustainability analysis, is by implementing a new tax through the back door,” Dr. Boako said. He added that without such a measure, the government would not have the necessary resources to maintain its financial commitments, thus exacerbating the fiscal challenges already faced by the country.
Dr. Boako’s concerns highlight a broader issue of fiscal management in Ghana, especially in the context of the country’s agreements with international bodies like the IMF. The government’s plan to eliminate certain taxes without a clear, sustainable strategy to make up for the lost revenue raises questions about how the country will balance its budget and ensure that it remains in compliance with the terms of the IMF programme. Furthermore, the introduction of new taxes, particularly if done covertly, could undermine the public’s trust in the government’s commitment to transparency and fiscal responsibility.
Dr. Boako urged caution, calling for the government to be transparent and clear about its fiscal policies. He emphasized the importance of adhering to the commitments made under the IMF programme to maintain the country’s financial credibility and avoid any actions that could destabilize Ghana’s economy. He also highlighted the need for a comprehensive approach to managing the country’s finances, one that carefully considers both revenue generation and expenditure management, without resorting to hidden taxes or fiscal shortcuts. The conversation surrounding the e-levy and betting tax is likely to continue to be a point of contention, as the government works to navigate the complex fiscal challenges facing the country.
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