The finance minister, Ken Ofori Attah presented the mid-year budget review to parliament yesterday. Many expected an increase in VAT as was rumored but as nsemwoha.com earlier reported, there wasn’t going to be an increase.
Below are a few highlights of the mid-year budget review.
1. Despite recent headwinds, the economy remains robust and resilient with significant improvements in several core indicators over the past 12 months. This can be cross-checked across several independent assessments by other domestic, institutional and multilateral stakeholders.
2. The economy responded well to the last year’s budget tax cuts – i.e. the nuisance taxes!
3. No increment in VAT (progressive citizens won the day!). Need I say more?
4. Special taskforce to enforce VAT and ensure revenue compliance – awesome! I like the new mojo of GRA in going after companies that are defaulting on their taxes.
5. Forensic audit of multinational companies on transfer pricing – this is a major move.
6. Prosecutions of persons and companies for tax evasion and malfeasance
7. Net fiscal adjustment of 0.4% of GDP (~900 million) needed to achieve 4.5% fiscal deficit target in line with programme commitments including IMF, hence requiring revised fiscal outlook
8. New tax measures but also increasing tax compliance and adjustment of discretionary expenditures
9. Luxury vehicle tax for cars with more than 3-litre engine capacity – commercial vehicles exempt!. Yeah, let’s tax all those crazy gas-guzzling V8s! I hope no one is given an exemption! Yes, no one!
10. Additional personal income tax band of 35% PAYE for those earning GHS10K per month (GHS120K per year). Those earning more have to chip in, don’t we? This is progressive!
11. Potential outsourcing of government payroll to a third-party vendor to ensure compliance, particularly meet WAMI convergence criteria of 35% wage bill-to-tax revenue from current 48%
12. New model of financing infrastructure through leveraging of natural resources through SWAP/BARTER arrangement with moratorium period provided – China’s Sinohydro to provide USD 2bn of infrastructure (roads, hospitals, housing, interchanges, etc) in exchange for refined bauxite. Ghana to establish a refinery in next three years, and this will not add to the budget deficit.