The government expects to raise a total of GH¢100,517 million as total revenue and grants next year. This amount will account for 20.0 percent of the country’s Gross Domestic Product (GDP) in 2022, up from a projected outturn of GH¢70,347 million (16.0 percent of GDP) for 2021.
Of the projected revenues including grants for 2022, domestic Revenue is estimated at GH¢99,547 million and represents an annual growth of 44.0 percent over the estimated outturn for 2021.
Finance Minister, Ken Ofori-Atta, disclosed in the 2022 budget statement that out of the total domestic Revenue amount, Non-Oil Tax Revenue constitutes about 77.5 percent and amounts to GH¢77,136 million. This will constitute 15.4 percent of GDP in 2022 and represents an increase of 46.2 percent from the 2021 projected outturn.
“… The resource mobilisation for 2022 is underpinned by the legislation of some new tax policy initiatives to support revenue mobilisation. The increase in Domestic Revenue by 44.0 percent is explained by the impact of expected improvements in tax compliance, reforms in revenue administration, as well as the rack of tax policy initiatives outlined earlier”.
Ken Ofori-Atta
Tax Policy initiatives
Some of the tax policy initiatives outlined in the 2022 budget include the imposition of an Electronic Transaction Levy of 1.75 percent on the value of digital transactions, zero rate tolls, and the Implementation of a modified taxation regime.
The government also pledged to intensify the Revenue Assurance and Compliance Enforcement (RACE) initiative to plug revenue leakages. Another initiative is the reduction of the withholding tax on sale of unprocessed gold to 1.5% from 3.0% effective January 1, 2022.
“…The revenue initiatives alone are expected to yield a minimum of 3 percent of GDP in 2022 and even more annually in the medium-term. More importantly, these measures will enhance domestic resource mobilisation and reduce our reliance on borrowing to fund our development needs. Indeed, the measures will improve our fiscal consolidation drive as reflected in the downward adjustment of 4.7 percentages of the fiscal deficit in 2022”.
Ken Ofori-Atta
Non-Tax Revenue
Non-Tax Revenue (excluding oil), on the other hand, is projected at GH¢10,254 million, approximately 2.0 percent of GDP and constitutes about 10.3 percent of Domestic Revenue.
Of this amount, Hon. Ofori-Atta explained that GH¢8,319 million will be retained for use by MDAs while GH¢1,936 million will be lodged, with a potential yield of GH¢152 million from the IGF Capping Policy.
Receipts from upstream petroleum activities are projected at GH¢6,628 million and accounts for 1.3 percent of GDP. The projected receipts from upstream petroleum activities for 2022 represents a 23.6 percent growth over the projected outturn for 2021. This, according to the Finance Minister, is mainly on the back of expected increase in both benchmark production and price of crude oil.
Total receipts from Other Revenue sources comprising SSNIT transfers to the NHIL, ESL including the Delta Fund, and the Pollution & Sanitation Levy is projected at GH¢5,528 million in 2022. Mr. Ofori-Atta stated that this indicates an increase of 18.7 percent over the projected outturn of GH¢4,656 million (1.1% of GDP) in 2021.
The government has planned to reduce its dependence on grants next year. As such, Mr. Ofori-Atta told Parliament that grants disbursement from Development Partners is estimated at GH¢970 million (0.2% of GDP), reflecting a nominal contraction of 19.0 percent over the 2021 projected outturn of GH¢1,198 million. Mr. Ofori-Attta cleared the air on the use of the grants, saying “anticipated Grants disbursements are solely Project-related”.
READ ALSO: Ghanaians to pay an electronic levy of 1.75% starting 1st January 2022- Finance minister
