Mahama’s Tax Trim Signals Relief, But NPP Eyes Broader Cuts
By Prince Ahenkorah
In a fiscal olive branch to cash-strapped households and beleaguered SMEs, Ghana’s Parliament has greenlit the abolition of the COVID-19 levy, a pandemic-era surcharge that ballooned public coffers under Akufo-Addo but squeezed consumers amid soaring fuel and utility bills a move from the Mahama administration that eases immediate burdens while exposing fault lines in the nation’s tangled tax regime.
Tabled in the 2026 budget by Finance Minister Dr. Cassiel Ato Forson, the repeal aligns with vows to decompress living costs, where inflation lingers at 22% despite easing global pressures.
Introduced in 2020 as a 1% levy on imports and domestic transactions to bankroll health responses and economic lifelines, it generated GH¢2.5 billion annually but morphed into a fixture, irking traders and households already reeling from debt defaults and cedi slides.
Abolition, effective January 2026, is projected to unlock GH¢1.8 billion in relief, funnelling savings into SME working capital and consumer pockets a pragmatic pivot in Mahama’s post-2024 reset, though fiscal hawks warn it nibbles at revenue needed for infrastructure and social nets.
The National Democratic Congress majority rammed the bill through with minimal fuss, framing it as equity for the “forgotten economy” battered by lockdowns and import shocks.
Yet, in a nod to cross-aisle pragmatism, Minority Leader Alexander Afenyo-Markin – voice of the ousted New Patriotic Party backed the move while sharpening his pitch for deeper incisions.
“This is a start, but half-measures won’t cut it,” he thundered during debates, zeroing in on the GH¢1 petroleum levy and the 18% electricity surcharge as “nuisance taxes” that perpetuate inequality.
Scrapping them, Afenyo-Markin argued, would cascade benefits to transport and manufacturing hubs, amplifying the government’s growth rhetoric into tangible wins for the 70% informal sector.
Behind the cheers lies a sharper calculus: Ghana’s tax-to-GDP ratio hovers at a dismal 14%, far below sub-Saharan peers, constraining Mahama’s ambitions for green energy and youth jobs.
The levy lift while popular risks widening deficits unless offset by VAT tweaks or digital levies on tech giants. Afenyo-Markin’s salvo underscores NPP’s strategy: position as fiscal realists, pressuring the administration to confront entrenched charges that fuel public discontent.
As 2026 unfolds, this tax thaw could catalyze recovery, but without bolder reforms, it may prove mere palliative in a landscape scarred by austerity and unmet promises.