Domestic revenue mobilisation is the key to making the vision of ‘Ghana Beyond Aid’ a reality.
Therefore, Ghanaians have been urged to contribute their quota to help the government raise money locally to finance public expenditure.
The Minister for Finance, Ken Ofori-Atta, who said this in Parliament when he presented the government’s 2022 Budget and Economic Policy, added that successive governments have relied on borrowing to meet a significant portion of the country’s expenditure.
He added that two items on the government’s expenditure, interest payments and compensation payments, from January to September 2021 amounted to GH¢48.7 billion, that is, 103.3% of total revenue and grants.
“These two expenditure items absorb all the revenue we collected as a country,” he added.
Mr Ofori-Atta said the government expenditure exceeds revenue collected because local mobilisation of funds was not enough as only 2.4 million Ghanaians (8.2 per cent of the population) were paying taxes
That means only 8.2 per cent of the population bears the burden of the entire 30.8 million people as of August 2021, he added.
In terms of corporate and small enterprise tax, the Ghana Revenue Authority statistics show that only 45,109 entities were registered as corporate taxpayers, and only 54,364 persons were registered as self-employed taxpayers, he said.
He added that the country could not continue to depend on only 8.2 per cent of its citizens to carry the burden of 30.8 million people.
“This is unsustainable and defeats all the tenets of economic prudence and moral justice”, he said
The Minister added: “Compared to our peers within the middle-income brackets, these statistics are a poor reflection on us, and we need to change the narrative. We must resolve that by the next Census; we should have changed these statistics to become an Upper Middle-Income Country in line with our Ghana Beyond Aid agenda. We must eclipse a 20 per cent threshold of revenue to Groos Domestic Product (GDP) ratio by 2024”.
He said the government was considering adopting specific measures to stop deficit financing in the 2022 budget, and the approval of Parliament was needed to make local revenue generation a reality.
Mr Ofori-Atta said the approval and implementation of the measures would significantly reduce government borrowing. If the measures were implemented, it is projected that the fiscal deficit to GDP would ease to 7.4 per cent in 2022 compared to 12.1 per cent in 2021.
The government, he said, had decided to place a levy on all electronic transactions— “Electronic Transaction Levy or E-Levy” — effective 1st January 2022.
He disclosed that electronic transactions, covering mobile money payments, bank transfers, merchant payments and inward remittances, would be charged at an applicable rate of 1.75 per cent.
To safeguard efforts made to enhance financial inclusion and protect the vulnerable, all transactions that add up to GH¢100 or less per day (approximately GH¢3000 per month) will be exempted from the E-levy.
Through the Ghana Revenue Authority, the government would, from January 2022, assist the Metropolitan, Municipal and District Assemblies (MMDAs) to implement a common platform for property rate administration to enhance property rate collections and accountability, the Finance Minister said.
Ishmael Batoma, ISD
