Ghanaians must brace themselves for ‘hardship’ due to increment in energy sector levies-Economist

Economist Jerry J. Afolabi has indicated that although the mid-year budget review scrapped the Luxury Vehicle Tax Levy, the increment in talk tax and the energy sector levies could create some level of hardship in the coming days.

Speaking to Nyankonton Mu Nsem on Rainbow Radio 87.5Fm, the analysts said the increment in petroleum products will definitely affect inflation, transportation and other sectors of the economy, thus any level of mismanagement would spell doom for Ghanaians.

He said Ghanaians would have to embrace themselves for the effects of these increments.

The Finance Minter Ken Ofori-Atta announced an upward review in a number of taxes hoping to raise more revenues to implement the government’s programmes and policies.

The Finance Minister made this known when he appeared before Parliament to present the mid-year budget.

Ken Ofori-Atta said in his presentation that the government is proposing an upward adjustment in the Road Fund Levy, the Energy Debt Recovery Levy; and the Price Stabilisation and Recovery Levy to bring the ratios close to twenty-one percent to help bridge the financing requirements.

“Government proposes to increase the Energy Sector Levies by GHp 20 per litre for petrol and diesel and GHp 8 per kg for LPG, so as to increase the inflows to enable Government issue additional bonds to pay down our energy sector debt obligations. Based on current indicative prices for petrol and diesel this translates to GHp 90 per gallon,” he said.

He further indicated that the communication service tax should be increased the tax to 9% to develop the foundation for the creation of a viable technology ecosystem in the country.

“This will comprise amongst others putting in systems to identify and combat cybercrime, protect users of information technology and combat money laundering and other financial crimes,” he announced.

Commenting on the increment, Mr. Afolabi stressed on the need for Ghanaians to prepare for the days ahead.

Touching on the banking sector, the analyst said some level of sanity has been achieved but there was more room for improvement.

Mr. Ofori-Atta in his presentation said contrary to claims that the clean up in the sector had created challenges; there were more success stories to be celebrated.

“Annual growth in private sector credit for 2018 was 10.6% compared with 13.4% growth a year earlier. The share of total outstanding credit to the private sector is still high at 88.0% in 2018, down from 89.8% in 2017.

“Total outstanding credit to the private sector at the end of December 2018 was ¢37,593.2 million, compared with ¢33,987.0 million recorded in the corresponding period in 2017,” he said. 

The Bank of Ghana (BoG) in August 2018, closed down five banks because they were said to have breached several banking regulations. 

BoG revoked the licences of uniBank Ghana Limited, The Royal Bank Limited, Beige Bank Limited, Sovereign Bank Limited, and Construction Bank Limited. This is after it closed down UT Bank and Capital Bank in August 2017. 

It granted a universal banking licence to Consolidated Bank Ghana Limited established by the government.

The two banks were closed down because their liabilities were more than their assets, forcing the Regulator to allow GCB to take their good assets, while PricewaterhouseCoopers recovers the bad debts.

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