BTA2023 The Institute of Economic Affairs (IEA) is calling on the government to retain the controversial Betting Tax, emphasizing its importance in revenue generation and curbing excessive gambling.
This appeal comes just hours before Finance Minister Dr. Cassiel Ato Forson presents the 2025 Budget in Parliament.
Balancing Revenue and Social Concerns
Despite the new administration’s promise to abolish the Betting Tax, along with the E-Levy, COVID-19 Levy, and Emissions Tax, the IEA supports keeping the tax but at a reduced rate—5% instead of the current 10%.
The think tank argues that Ghana’s low tax revenue-to-GDP ratio (13-14%) is far below the 20-25% average of middle-income countries, making it essential to explore innovative tax policies to boost revenue.
Closing Loopholes to Offset Tax Cuts
To compensate for revenue losses from potential tax reductions, the IEA recommends:
- Tackling trade mis-invoicing, tax exemptions, and transfer pricing abuses.
- Enhancing tax compliance through digitization.
- Simplifying the tax structure to minimize evasion.
- Introducing new levies, including an e-commerce tax and a windfall tax on extractive industries, telecom companies, and banks that generate super-profits.
However, the IEA warns that even with better tax efforts, Ghana’s small GDP (approximately GHS 1 trillion) limits how much revenue can be raised. It suggests renegotiating fiscal terms in the natural resource sector to maximize state benefits while promoting value addition to drive long-term revenue growth.
Expenditure Discipline and Infrastructure Investment
While advocating for improved revenue collection, the IEA stresses the need for fiscal discipline. The government must cut wasteful spending but avoid harming critical sectors like health, education, and infrastructure.
A key budget expectation is a significant increase in capital expenditure (CAPEX), which has dropped to just 3-4% of GDP. The IEA recommends raising CAPEX to at least 10% of GDP in the medium term to boost growth, create jobs, and improve living standards.
Independent Value-for-Money Department (IVMD)
As part of expenditure rationalization, the IEA backs the establishment of an Independent Value-for-Money Department (IVMD)—a proposal championed by President John Mahama.
This department, aimed at eliminating inefficiencies and inflated costs, could save Ghana an estimated 3-4% of GDP—equivalent to the entire current CAPEX budget.
A Defining Moment for Ghana’s Fiscal Policy
With the 2025 Budget set to shape the country’s economic future, the IEA insists that fiscal policies must prioritize both revenue enhancement and prudent spending. Ghana stands at a crossroads, and the decisions made today will determine the country’s economic trajectory in the years ahead.
