Government’s decision to impose new taxes on Ghanaians could be attributed to conditions under the economic bailout with the international Monetary Fund (IMF). This is according to economist, Dr. Godfred Bokpin. He says the economic bailout has limited government’s external borrowing avenues hence the need to introduce revenue generation systems such as taxes.
A Member of Parliament’s finance committee, Anthony Akoto Osei has also criticized the development citing government’s failure to seek Parliamentary approval for the deal. “What government has done can be traced to the requirements of the IMF because government cannot finance its deficit through the Bank of Ghana. There will be the need for government to generate more revenues through taxes,” Dr. Bokpin stated. He also challenged the approach used by the Ghana Revenue Authority (GRA) in imposing taxes describing it as unfavorable to the overburdened formal sector. “It is the approach that we are adopting to close the funding gap that is the issue. Tax exemption and the huge informal sector that is not taxed, then we cannot justify the huge withholding taxes that are imposed on the formal sector. It looks like we are just focusing on the formal sector that is already burdened with so many tax issues,” he observed.
The International Monetary Fund (IMF) after its second review of Ghana’s economic performance under the program on Wednesday, announced it is broadly satisfied with the bailout programme with Ghana but said “the economic outlook remains difficult with risks tilted to the downside.” The completion of the review will now allow the disbursement of another US$114.6 million, bringing total disbursements under the arrangement to about US$343.7 million. The IMF was encouraged that the government’s fiscal consolidation efforts are on track and that electricity production capacity is being gradually increased. It however warned government to “resolutely continue their fiscal consolidation efforts. With government debt continuing to increase and financing remaining a challenge, the 2016 budget rightly aims at a stronger consolidation than originally envisaged. –
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