Ghanaians may soon face a higher Value Added Tax (VAT) rate, as economist Professor Godfred Bokpin predicts an increase to 18% or slightly lower in the 2025 budget. The potential VAT adjustment comes as the government prepares to scrap several existing taxes, including the E-Levy, COVID-19 levy, and betting tax, raising concerns over how the resulting revenue gap will be filled.
In an interview with Citi Business News, Professor Bokpin suggested that the government might also extend VAT to cover financial services as part of efforts to boost revenue. He anticipates that authorities will restructure the VAT system by merging various standard levies with the existing VAT rate.
“One thing I am expecting the NDC to do, which I think they will, is to merge the standard levies with the standard VAT rate. We are talking about levies of almost 6% while the standard VAT rate is 15%, so I think they should merge it and peg it at 18% or below,” he explained.
While this move could simplify the tax structure, Professor Bokpin cautioned that any VAT rate exceeding 18% could have negative consequences, affecting productivity and disproportionately impacting low-income earners.
The 2025 budget, the first under President John Mahama’s new administration, is expected to introduce key economic reforms that address concerns from both the private and public sectors. Businesses are looking for pro-business policies, while the public sector demands improved service delivery and better procurement processes.
With President Mahama pledging to cut wasteful spending and enforce fiscal discipline, the government faces a delicate balancing act—scrapping taxes while ensuring sustainable revenue generation to support national development.
As anticipation builds ahead of the budget announcement, all eyes are on how the government will navigate its fiscal policies to achieve economic stability without overburdening businesses and consumers.
