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Fiscal policy analyst calls on govt to scrap COVID-19 Health Recovery Levy

Dr. Alex Ampaabeng, a fiscal policy analyst, has called on the government to scrap the COVID-19 Health Recovery Levy to ease the tax burden on citizens.

The COVID-19 Health Recovery Levy is a special levy on the supply of goods and services and imports, introduced in 2021 through an Act of Parliament, to raise revenue to support COVID-19 expenditures.

Fortunately, Ghana has seen a significant reduction in COVID-19 cases due to increased herd immunity from nationwide vaccination, booster shots, and strict adherence to COVID-19 protocols.

Dr. Ampaabeng said the mid-year budget review is an opportunity for the government to provide relief to citizens who have been struggling with unfavourable economic conditions, characterized by high inflation.

“I think that if that 1% means you are going to pay 1% less on items that we buy, it is still something. Beyond the financial incentive, tax is about fairness. What exactly are we paying the levy for? Where is the COVID-19?” he said in an interview with the Ghana News Agency (GNA) on his expectations for the mid-year budget review.

He also expects a review of government’s flagship programs, realistic expenditure cuts, and updates on property tax collection.

Professor Peter Quartey, the Director of the Institute of Statistical, Social and Economic Research (ISSER), said the government could use the platform for the mid-year budget review to deepen accountability by providing a breakdown of how the US$600 million from the International Monetary Fund (IMF) was disbursed.

He said he expects the government, through the Central Bank, to continue to sustain the relative stability of the exchange rate and fight inflation without hurting the manufacturing sector of the economy.

“As we continue to increase the policy rate, it means we are mopping up excess liquidity and increasing lending rates. So, to what extent are we going to strike a good balance to ensure that businesses, or the private sector, thrives?” he said.

He expressed the hope that the government would listen to concerns raised about its size and announce a downsizing of the number of appointees.

Dr. Charles Nyaaba, the Executive Director of the Peasant Farmers Association of Ghana (PFAG), called on the government to give tax waivers and remove import duties on agro-inputs and machinery to bring down the cost of farm inputs and reduce the cost of production.

He said the government should also speed up the establishment of a credit guarantee system to encourage the private sector to invest in value addition, food processing, and packaging.

“Invest heavily in our irrigation development as a risk mitigation measure to encourage the youth and other private investors to go into production,” he said.

He said the high cost of vegetables such as tomatoes, garden eggs, and pepper is due to over-reliance on imports due to poor irrigation infrastructure and storage systems.

Dr. Nyaaba said that once the infrastructure is put in place, farmers who are business-oriented would go in to produce.

He urged the government to facilitate the establishment of fertilizer manufacturing in the country and improve funding for research and development.

The Executive Director said the Economic Enclave Project concept is good, but given that “we are at a crossroads, where agriculture is on the verge of collapse, I expect to see a more radical approach in terms of investment in the agricultural sector.”

Source: GNA

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