Former government official Dr. Gideon Boako has warned that the proposed abolition of the e-levy and betting tax by the Mahama-led government could violate the terms of the IMF program and potentially lead to the introduction of new taxes.
“We don’t want a situation whereby you give with your left hand and you take with your right hand. They have to be explicit. If they are cutting the taxes, they cut the taxes, they don’t introduce any new taxes, you cannot cancel or scrap e-levy, scrap betting tax, and go behind and create another tax to fill the gap,” he said in an interview with Citi News.
The Member of Parliament for Tano North and a key figure in the previous government, highlighted the potential conflict between the incoming Mahama administration’s proposed tax cuts and the ongoing International Monetary Fund (IMF) program.
On Monday, January 13, Finance Minister-Designate Dr. Cassiel Ato Forson during his vetting in Parliament signaled the intention to abolish the controversial e-levy and betting tax, a move welcomed by many.
However, Dr. Boako has warned that these tax cuts could significantly impact government revenue, potentially jeopardizing the nation’s financial commitments under the IMF agreement.
“If they indeed want to scrap e-levy, betting tax, the COVID-19, the emission taxes, the only other thing they can do in order to match up with the debt service to revenue ratio as enshrined in the IMF programme and captured in the debt sustainability analysis is to have another tax introduced through the back door to make up for the shortfall. Other than that they do not have any other room.”
Dr. Boako emphasizes the crucial role of maintaining fiscal discipline to adhere to the terms of the IMF program.
He also suggested that compensating for the revenue loss from tax cuts would likely require the introduction of new taxes, potentially undermining the very purpose of the proposed tax reductions.
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