A recent report by KPMG and the United Nations Development Programme (UNDP) sheds light on how strategic tax reforms outlined in the 2025 budget aim to accelerate economic advancement. The document highlights how these reforms, including the introduction of a betting tax, the E-Levy, and a revised Growth and Sustainability Levy (GSL), are pivotal for fostering growth and development.
Tax-Free Threshold Expansion: A Relief to Low-Income Earners
With the finance minister, Dr. Cassiel Ato Forson, announcing a rise in the personal income tax-free threshold from GH¢490 to GH¢539, the move is poised to benefit low-income earners significantly. According to KPMG’s insights, aligning the threshold with the minimum wage hike supports progressive taxation and boosts the disposable income of the underserved populace, setting the stage for increased consumer spending and economic vigor.
Growth and Sustainability Levy: A Double-Edged Sword
Central to the budget reforms is the proposition to increase the GSL from 1% to 3% on mining companies’ gross production. This adjustment aims to allow the government a larger share of the windfall from rising global gold prices; however, KPMG warns this could be met with resistance due to existing stability clauses in some mining agreements. As stated in GhanaWeb, fostering stakeholder engagement is imperative to fully unlock the revenue potential, balancing government interests with industry stakeholders.
Long-term Certainty in Tax Policy
While the proposal to extend GSL and SIL introduces immediate fiscal benefits, there are concerns about the erosion of long-term policy certainty. The report recommends crafting permanent tax positions to aid in coherent tax planning, offering stability to both businesses and consumers.
Abolition of Emissions Levy: Boosting the Shift to Electric Vehicles
The 2025 budget proposes abolishing the emissions levy, providing an intriguing push towards electric vehicle adoption in Ghana. However, KPMG emphasizes that success hinges beyond affordability, necessitating strategic implementation of infrastructure investments such as charging stations and leveraging skilled labor. Ample financial incentives, they argue, will also accelerate the electric vehicle transition.
Final Thoughts
The 2025 budget holds promise with its progressive tax policies aimed at nurturing economic growth. However, as these measures roll out, their success will rest on careful implementation and robust stakeholder engagement. Balancing immediate revenue needs with long-term economic certainty remains crucial for sustained prosperity. According to GhanaWeb, these collaborative efforts could set a new benchmark in how economies cultivate growth through informed fiscal measures.
