Today, the Parliament will vote on 3 new tax bills.
The Growth and Sustainability Levy Bill, Excise Duty, and Excise Tax Stamp (Amendment) Bills will all be up for vote in Parliament today.
The Board’s approval of the staff-level agreement for the $3 billion International Monetary Fund (IMF) Programme would be made easier with the approval of these unpaid revenue mobilization invoices.
Passing all pending revenue bills, which are essential for a successful budget implementation, and intensifying efforts to raise the tax-to-GDP ratio from below 13% to the sub-Saharan average of 18%
The government will be able to complete four of the five Prior Actions outlined in the Staff Level Agreement as a result of the Bills’ passage.
The Public Utilities Regulatory Commission (PURC) has already finished adjusting tariffs; publishing the Auditor-Report General’s on COVID-19 spending; and integrating the Ghana Integrated Financial Management Information System with the District Assemblies Common Fund (DACF), the Road Fund, and the Ghana Education Trust Fund (GETFund) (GIFMIS).
the approval of all pending revenue bills, which are essential for the efficient implementation of the budget, as well as supporting our attempts to raise our tax rate from below 13% to the sub-Saharan average of 18.
Due to the closure of the domestic and foreign bond markets, the government must rely on Treasury Bills and low-interest loans as its main sources of funding for the fiscal year 2023.
Hence, for the country to emerge from the current economic crisis, Parliament must carefully evaluate and approve fiscal measures.
The Growth and Sustainability Levy is intended to raise funds for economic growth and fiscal sustainability, according to George Swanzy Winful, Director of Revenue Policy Division of the Ministry of Finance.
He claimed that this was required to close the funding shortfall brought on by COVID-19 and the Russia-Ukraine war.
He made a suggestion that the Growth and Sustainability Levy is a temporary measure that will be put in place between 2023 and 2025 to assist address the imbalances now present.
According to Mr. Winful, the National Fiscal Stabilization Levy has been replaced with the Growth and Sustainability Levy (NFSL).
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He said that although 11 corporations were being charged the National Fiscal Stabilization Levy (NFSL), all businesses would be subject to the Growth and Sustainability Tax.
He issued a warning that failure to adopt the laws would require the government to reconsider its revenue projections, which would have detrimental effects on the public purse.
The government has signaled income mobilization measures to the IMF, which include the unpaid bills, according to the director of the Ministry of Finance’s Revenue Policy Directorate.
Thus, he claimed that not passing the laws will make the nation’s already precarious financial situation worse.
He emphasized that the nation is under unusual circumstances and urged the members of Parliament to enact the pending legislation today.
In order to address the public’s concerns, Mr. Winful promised that the Ministry of Finance would deepen stakeholder engagements.
The 2022 Income Tax (Amendment) Bill
The Income Tax (Amendment) Bill, 2022 seeks to alter the Income Tax Act, 2015 (Act 896) in order to update individual income tax rates and add a new income tax band.
It will also unify the provisions for loss carried forward and reform how foreign exchange losses are treated. It will create a withholding tax rate on the realization of assets and liabilities as well as lottery wins.
Additionally, the bill will modify the maximum limits for quantifying motor vehicle benefits, raise the rates for concessional income taxes, and raise the optional rate for individuals on the gain from the realisation of an investment asset.
The minimum wage for 2023 has been adjusted to be the basic tax-free income, and an extra band of 35% has been included as part of the high net worth taxation strategy.
Since 2015, there has been no revision to the upper limits for the measurement of motor vehicle benefits.
As a result, the government updated these upper bounds to reflect inflation.
The implementation of a return that must be filed within 30 days of the realization and a withholding tax will facilitate the payment of tax on the realization of assets and liabilities.
Also, the individual’s voluntary tax rate on the gain from realizations has gone up.
A consequence modification will likewise raise the rate for gift-related revenue.
While the handling of foreign exchange profits is limited to actual losses, the loss carried forward provisions are being unified at 5%.
Moreover, foreign exchange losses associated with capital expenditures must be capitalized.
With the intention of gradually eliminating transitory concessions, the income tax rates are being evaluated increased.
The revenue output from these adjustments, which are thought to be necessary to support the expanding economy, is expected to be around GH1.290 billion (or US$1, 290,000,000).
Bill to Modify Excise Duty, 2022
The Excise Duty (Amendment) Bill, 2022 is intended to alter the Excise Duty Act, 2014 (Act 878) in order to update the excise duty rates for cigarettes and other tobacco products in accordance with the ECOWAS Protocols and raise money to reduce the detrimental effects of these excisable items.
To enhance income, the Bill will raise the excise charge on wine, malt beverages, and spirits as well as levy an excise duty on sweetened beverages, electronic cigarettes, and electronic liquids.
According to the ECOWAS directive on the harmonisation of excise taxes on tobacco goods, there must be both an ad valorem and a particular excise charge on tobacco products.
For example, the specific tax must be at least the cedi equivalent of $20 per net kilogram for all other tobacco goods and the minimum equivalent of $0.002 per stick for cigarettes, cigars, and cigarilloes. The ad valorem rate must also be at least 50%.
In order to implement this Directive in accordance with Ghana’s membership in ECOWAS, the Bill also seeks to amend Act 878.
Over the past ten years, there has been a surge in the usage of electronic cigarettes and other smoking accessories.
Now exempt from excise duty, these products will soon be subject to it since they include dangerous additives like nicotine and other substances.
All other sweetened beverages, including processed fruit juices, are exempt from excise duty aside from mineral waters and malt beverages.
The Bill amends Act 878 to add excise taxes to certain goods and raise them on malt beverages and mineral waters.
Despite having a higher alcohol content than beer, spirits have a lower excise tax than beer.
According to best practices for the imposition of excise charges, the excise duty on spirits is being raised above that of beer in order to remedy this.
The excise charge on wines has been increased as a result.
The descriptions of the various products are being updated to comply with the World Customs Organization Harmonized Commodity Description and Coding Standard for ease of reference and the record.
Act 878 is modified by the Bill by adding a new Schedule in place of the First Schedule.
The purpose of the amendment is to implement new excise tax rates on sweetened beverages and alter the excise tax rates for cigarettes and other tobacco products to comply with the ECOWAS Protocols. Around 450 million Ghana Cedis will be generated if the Bill is passed.
Levy for Growth and Sustainability
The purpose of the bill is to establish a special tax known as the Growth and Sustainability Levy in order to raise money for the economy’s expansion and budgetary sustainability.
The pandemic of the coronavirus disease (COVID-19) significantly decreased sales. and greatly boosted spending.
The dual peril of the Russian-Ukrainian conflict has also led to unprecedented global crises, currency depreciation, and effects on living standards and inflation rates.
These shocks have not spared the Ghanaian economy.
To generate more money for national development and social protection for the most vulnerable, further initiatives are necessary.
As part of its efforts to obtain money for these actions, the government has implemented the Growth and Sustainability Levy.
The levy will be applied to the firms’ and institutions’ earnings before tax as well as to the production in the case of upstream oil and gas companies and mining companies included in the first column of the schedule.
2023 revenue is anticipated to be at GH2.216 billion.
The Minister in charge of Finance will examine the Levy in 2025.
