The overall performance of government revenues in the first half of the year was poor as most of the tax handles could not raise the amounts targeted.
Despite the poor performance of most of the components, the COVID-19 Health Levy exceeded its target by almost 70% in the first six months of the year.
Government raised GH¢640,059,744 from the COVID-19 Health Levy between January and June 2022 compared to the target of GH¢376,716,861. This means government raised GH₵263,342,883 more than it expected in the first half, which in percentage terms, is 69.9% in excess of the target.
The impressive performance of the levy suggests that government may meet the revised target of GH¢1,120,951,982 at the end of the year.
Electronic Transactions Levy performed poorly
Meanwhile, the 1.5% E-Transaction Levy performed poorly in the first half of the year, due mainly to delays in the passage of this revenue measure announced in November 2021. The E-Levy was only passed in May this year after several controversies, brawls in Parliament and general public outcry.
The government raised GH¢93,728,578 from the E-levy between May and June this year, against a programmed target of GH¢1,462,311,113 for the first half of the year.
Due to the poor performance of the newly introduced tax, government decided to revise its initial revenue target of GH¢6,963,386,254 (GH₵6.9 billion) announced in the 2022 budget statement to GH¢611,000,000 (GH₵0.6 billion).
The revised target announced in the mid-year budget review, means government reduced the expected revenues from the E-Levy by GH¢6,352,386,254. In other words, the revision means that government has cut the expected revenues from the E-levy by 91.2% for the 2022 fiscal year.
Government could have missed initial target
Meanwhile, a further analysis revealed that based on the performance of the levy in the two months after its implementation, government would have still missed the target for the year. This is because, based on the target for the first half, government was expected to raise on average, GH¢243,718,518.8 each month from the E-levy.
It is therefore, appropriate for the government to have revised its revenue targets for the E-levy this year.
In its assessment of the 2022 Mid-Year Budget Review, PricewaterhouseCoopers (PwC) stated that the downward revision of the e-levy revenue target by over 91% is an indication that there is the need for a review of the policy and its implementation.
“We wish to remind Government of our call for the e-levy rate to not exceed the rates typically charged by resident platform operators of not more than 0.75%”.
PwC
In accordance with the difficulty in raising revenues as shown in the performance of the first half of the year, government revised the previous revenue and grants target of GH₵100.5 billion for 2022 to GH₵96.8 billion, a 3.7% reduction. This still translates into a growth target of 37% relative to the 2021 performance (GH₵70.9 billion).
PwC, after its assessments, indicated that the revised target is expected to be achieved mainly as a result of the windfall in revenue from oil production and exports, a result of increased global oil prices. This, it noted, will help to significantly offset shortfalls from other revenue sources, particularly tax revenues.
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