Minister for Information Kojo Oppong Nkrumah has urged all Ghanaians, particularly members of the minority National Democratic Congress (NDC) to put partisanship aside and support government’s revenue measures.
Accordingly, the Information Minister has appealed to the Minority Caucus in parliament to help pass the outstanding revenue bills to advance Ghana’s $3 billion programme to the International Monetary Fund (IMF) Executive Board for approval for the country to ease its current economic difficulties.
The bills, which are currently in Parliament, are the Income Tax (Amendment) Bill, Excise Duty and Excise Tax Stamp (Amendment) Bills as well as the Growth and Sustainability Levy Bill.
Briefing journalists in Parliament yesterday, Mr. Oppong Nkrumah said cumulatively, the bills are expected to rake in GH¢4 billion annually.
Passage of the revenue bills, he pointed out, will complement the positive news of creditors expressing willingness to assist Ghana with financing assurances to secure the IMF bailout targeted at balance of payment support.
Already, the Bank of Ghana has indicated that these fiscal reforms will provide significant reduction of debt service and help create fiscal space.
The international and domestic bond markets are shut for the financing of government’s programmes, forcing government to rely on the Treasury Bills and concessional loans as the primary sources of financing for the 2023 fiscal year.
This is also crucial because, as part of the prior actions in the IMF Staff Level Agreement, the BoG and the Ministry of Finance have finalised a Memorandum of Understanding (MoU) on zero financing to the budget, which will be signed soon.
Mr. Oppong Nkrumah emphasised that with the commitments made by external creditors, it behoves parliament to show good faith by passing the revenue bills in the supreme interest of the country.
He pointed out that failure to pass the bills will amount to holding all the efforts made to save the economy hostage which can derail the progress made so far.
The Information Minister is hopeful that the passage of the bills in addition to all the agreed prior actions in the staff level agreement to secure the bailout will be critical in resetting the economy on the path of recovery, including putting it firmly on a disinflation path and sustained growth
It is widely acknowledged that the COVID-19 pandemic, rising global food prices, rising crude oil and energy prices; and the Russia-Ukraine war have adversely affected Ghana’s macro economy with their spillover on the country’s financial sector.
The combination of these adverse external shocks had exposed Ghana to a surge in inflation, a large exchange rate depreciation and stress on the financing of the budget, which taken together have put public debt on an unsustainable path.
Income Tax (Amendment) Bill, 2022
The object of the Income Tax (Amendment) Bill, 2022 is to amend the Income Tax Act, 2015 (Act 896) to revise the rates of income tax for individuals and introduce an additional income tax bracket.
It will introduce a withholding tax rate on the realisation of assets and liabilities and on winnings from lottery, unify the loss carried forward provisions and revise the treatment of foreign exchange losses.
The Bill will also increase the optional rate for individuals on the gain from the realisation of an investment asset, revise the upper limits for the quantification of motor vehicle benefits and increase the concessional income tax rates.
The individual personal income tax bands have been reviewed to accommodate the minimum wage for 2023 as the basic tax free income and an additional band at 35% as part of the high net worth taxation policy.
The upper limits for quantification of motor vehicle benefits have not been revised since 2015.
Government has therefore revised these upper limits to account for inflation.
Compliance with the requirements for payment of tax on realisation of assets and liabilities is being made more efficient with the introduction of a return to be submitted within 30 days of the realisation and a withholding tax.
The optional tax rate for individuals on the gain from realisations has also been increased.
The rate for income from gifts will also be increased as a consequential amendment.
The loss carried forward provisions are being unified at five percent while the treatment of foreign exchange gains is being restricted to actual losses.