The Finance Minister, Dr. Cassiel Ato Forson, has outlined a series of fiscal measures to bridge the revenue gap resulting from the government’s decision to abolish taxes, including the E-Levy, Betting Tax and COVID-19 Levy.
Presenting the 2025 Budget Statement and Economic Policy on March 11, Dr. Cassiel Ato Forson assured Parliament that the expected shortfall will be addressed through enhanced revenue mobilization and strict expenditure controls.
He explained that one key strategy to offset the lost revenue is by reducing the tax refund ceiling, which has been mismanaged in recent years.
“The Tax Refund Account has been abused. A study covering the last eight years revealed that GHS29.11 billion accrued to the account, yet only GHS12.5 billion—representing 43% of the total—was used for its intended purpose,” he noted.
To curb these inefficiencies, the government will cut the tax refund ceiling from 6% to 4% of total revenue, a move expected to save GHS3.8 billion.
“By reducing the tax refund ceiling from 6% to 4%, we will save GHS3.8 billion. This alone is enough to close the revenue shortfall from the removal of the E-Levy, which amounts to GHS1.9 billion, and the Betting Tax, valued at GHS180 million. Mr. Speaker, we have already saved GHS3.8 billion for 2025 from just one source, and this is sufficient to offset the gap left by the removed taxes,” he assured.
The Minister also announced plans to strengthen tax administration by amending the Revenue Administration Act to enhance efficiency and compliance, with an anticipated 2% improvement in net tax revenue collection.
“As part of this budget, we will amend the Revenue Administration Act, 2016 (Act 915) to boost tax revenue, net of tax refunds, by 2%, representing 0.3% of GDP,” he revealed.
Furthermore, the 2025 minimum wage, recently negotiated with the National Tripartite Committee, will be zero-rated to protect low-income earners.
The government also intends to introduce a new Non-Tax Revenue Legislation to improve revenue collection from state services and assets, while streamlining property rate collection to enhance local government finances.
Additionally, Ghana’s VAT system will undergo reforms to eliminate inefficiencies and distortions, broadening the tax base while reducing the effective VAT rate for businesses and consumers.
To complement revenue measures, the government has announced a reduction in public expenditure.
•The number of ministries will be cut from 30 to 23, and ministerial appointments will drop from 88 to 60, leading to significant savings in salaries, operational costs, and logistics.
•All arrears and payables will be subjected to an audit and validation process before payments are made.
•Non-essential programs such as YouStart, One District One Factory, and GhanaCARES will be eliminated.
Energy Sector Reforms
In the energy sector, the government is rolling out measures to improve revenue collection and reduce costs.
•The Electricity Company of Ghana (ECG) and NEDCo will implement new strategies to enhance revenue mobilization.
•The government will renegotiate Independent Power Producer (IPP) contracts to cut capacity charges and operational costs.
•The Energy Sector Levies Act (ESLA) will be reviewed to consolidate multiple levies—including the Energy Debt Recovery Levy, Energy Sector Recovery Levy (Delta Fund), and Sanitation & Pollution Levy—into a single charge, ensuring that proceeds are used to service energy sector debt.
Dr. Forson stressed that these reforms will not only ensure fiscal discipline but also sustain economic growth while relieving Ghanaians of excessive tax burdens.
“To those asking how we will cover the revenue gap from tax removals, the answer is simple: we have stopped the bleeding,” he declared.
With a focus on efficiency, prudent spending, and improved revenue mobilization, the government remains confident that it can maintain fiscal stability while fostering economic resilience.
