Ghana may incur GH¢6.4bn in Revenue Losses if Levies are Scrapped — KPMG Survey

A recent pre-budget survey by auditing and accounting firm, KPMG has raised concerns over the potential fiscal impact if the government decides to cancel the Electronic (E-levy) and Covid-19 levies in the upcoming 2025 budget.

The survey, submitted to the Finance Ministry, reveals that scrapping these levies could lead to a revenue shortfall of approximately GH¢6.4 billion—a significant amount that could have far-reaching implications for the country’s economy.

The survey findings indicate that if the government were to abolish the E-levy and Covid-19 levy, the resulting loss in revenue would be substantial. As contained in the report, “KPMG notes that abolishing the E-levy and Covid-19 levy could result in a revenue shortfall of at least GH¢6.4 billion.”

This stark figure has prompted discussions among policymakers and industry stakeholders regarding the best path forward for maintaining fiscal stability while pursuing economic reforms.

The implications of this potential revenue loss are not limited to government coffers. A reduced revenue base could affect the country’s ability to invest in critical infrastructure and social services at a time when there is a pressing need to support economic recovery and development. Some respondents in the survey have highlighted the importance of exploring alternative measures to bridge this gap, with technology emerging as a key enabler.

Leveraging Technology for Fiscal Sustainability:

One of the recommendations emphasized in the survey is the strategic use of technology to enhance revenue collection and close fiscal gaps.

“Beyond the revenue measures proposed by respondents, the government should also leverage technology to enhance property rate administration and collection, as well as review taxation within the digital and e-commerce sectors.

Additionally, strengthening public financial management systems, closing loopholes in public procurement, and reducing wasteful spending are critical to improving fiscal sustainability.”

By adopting these measures, the government would not only compensate for the loss from scrapping the levies but also establish a more resilient and efficient revenue system.

The survey underscores the importance of innovation and digital transformation in the public sector. In an era where digital transactions are becoming the norm, modernizing revenue systems could provide a dual benefit: enhancing tax collection efficiency and ensuring that the country’s fiscal policies remain adaptable to rapid technological changes.

Focus on the 24-Hour Economy and Economic Recovery:

The KPMG survey also sheds light on the broader economic recovery strategy under the new administration. A central pillar of this strategy is the promotion of a 24-hour economy—a policy initiative expected to boost economic activity and create employment opportunities, especially for the country’s youth. The survey reveals strong confidence among respondents in the new government’s policy initiatives.

“80% of respondents are confident that the new government’s policies in the 2025 Budget will drive economic recovery. This optimism hinges on anticipated tax relief and the successful rollout of the 24-hour economy. More than 50% of respondents have called for the scrapping of the E-levy and Covid-19 levy. Likewise, a substantial portion of respondents (72%) agree that the 24-hour economic policy will create jobs.”

The focus on a 24-hour economy is viewed as a transformative step that could stimulate key sectors that naturally thrive with round-the-clock operations. Industries such as manufacturing, transport and logistics, healthcare, retail and hospitality, and digital services stand to benefit from increased consumer demand and enhanced global market competitiveness. By fostering an environment where business activities continue uninterrupted, the government hopes to elevate living standards and reduce unemployment.

Broader Policy Reforms and Private Sector Engagement:

In addition to the levies and the 24-hour economy, the survey highlighted other policy areas that require attention. Respondents expressed strong support for initiatives that promote import substitution and the consumption of made-in-Ghana goods. There is also a clear call for reforms in tax and education policies, as well as for the deployment of public-private partnerships (PPPs) to diversify funding sources and enhance service delivery.

Improving tax collection mechanisms remains a priority. Enhanced public financial management and the closing of loopholes in public procurement are seen as critical steps toward ensuring that government funds are used efficiently. These measures, combined with strategic technological investments, could provide a robust framework for sustaining fiscal health and fostering long-term economic growth.

The warning of a potential GH¢6.4 billion revenue loss if the E-levy and Covid-19 levy are scrapped serves as a critical reminder of the importance of maintaining a balanced and sustainable fiscal policy. Simultaneously, the strong confidence in the new administration’s policy initiatives—especially the push towards a 24-hour economy—signals optimism for a robust economic recovery.