Collins Sefa President John Dramani Mahama has signed the COVID-19 Health Recovery Levy Repeal Act, 2025, officially abolishing the 1% levy that was introduced during the peak of the pandemic to support health-related expenditures.
The repeal marks a major step in the government’s broader tax reform agenda aimed at alleviating the financial pressures on households and businesses.
According to the Ministry of Finance, the scrapping of the levy will put an estimated GH¢3.7 billion back into the pockets of Ghanaians in 2026 alone. The measure is expected to ease the tax burden on consumers, reduce operating costs for businesses, and stimulate overall economic activity.
The 1% levy, applied on the VAT-exclusive value of goods and services, had long been criticised by businesses, trade groups, and economic analysts who argued that it contributed to price hikes and slowed business growth. Its removal has therefore been widely welcomed across the private sector, with many stakeholders describing it as a timely intervention to support economic recovery.
The repeal forms part of a broader set of VAT reforms announced by government, which collectively are expected to return almost GH¢6 billion to businesses and households. Officials say the tax relief package is one of the most significant introduced in recent years and reflects government’s commitment to reviving domestic consumption and strengthening the productive sector.
Economists predict that the savings from the repeal will improve purchasing power, support job creation, and help reduce inflationary pressures, particularly within sectors heavily affected by rising operational costs. Small and medium-sized enterprises (SMEs), which form the backbone of Ghana’s economy, are expected to benefit notably from the move.
Government sources indicate that the repeal also aligns with efforts to streamline the tax system, eliminate redundant levies, and encourage compliance by reducing the overall tax burden. As Ghana continues its post-pandemic recovery, officials say the focus is on creating a more business-friendly environment to encourage investment and long-term growth.
The implementation of the repeal will be monitored closely by fiscal experts, especially its impact on government revenue and budget planning for 2026. Despite concerns about potential short-term revenue losses, authorities remain confident that increased economic activity and improved tax compliance will offset any immediate fiscal effects.
With the act now in force, businesses and consumers are expected to see the benefits reflected in pricing, transaction costs, and overall cash flow over the coming year.
