Keen Attention On The Scraping Of Fiscal Stabilization Tax As Ofori-Atta Presents 2020 Budget November 14

The build-up to the presentation of the 2020 budget started on Tuesday when Deputy Majority Leader, Hon. Sarah Adjoa Sarfo, announced in Parliament that Finance Minister Ken Ofori-Atta will be making that presentation on November 14.

Thenceforth, there have been various shades of expectations about critical things that the budget will address, especially tax related issues, with the future of the fiscal stabilization tax being very topical.

The stabilization tax had been instituted by the Mahama government with the aim to raise money to cure instabilities in government’s fiscals. It was given a timeline to expire by 2017. However, when the Akufo-Addo government took over from the Mahama government, it extended the expiration timeline for two more years.

2019 therefore became the sunset year for that tax. Expectations are high that the fiscal stabilization tax will not feature in the 2020 budget.

Another thing that is being keenly looked out for is whether the 2020 budget will address the issue of the long pendency of the tax exemption bill. That bill had been laid before Parliament when Ghana was exiting the IMF program with the aim that it would restrict huge losses that the country makes from its numerous tax exemptions.

At the time the Bill was laid before Parliament, it was estimated that the hemorrhage to the public purse as a result of these tax exemptions was about 1.6%  of GDP.  There is a lot of expectation that the 2020 budget will address this issue.

There is also the issue of the pendency of the implementation of the policy to deploy physical Value Added Tax (VAT) electronic systems to registered shops and businesses so that their transactions can be monitored in real time for easy taxing.

Many are expectant that the 2020 budget will give an update on that program.

In July, when the Finance Minister presented the mid year budget review, Ken Ofori-Atta said the government had decided to change the transactional arrangement of power purchase agreements from ‘take and pay’ to ‘take or pay.’

The ‘take and pay’ arrangement is a stricture that ties government to paying for power that is produced by the independent power producers once the power is produced; whether government needs the power or not. The ‘take or pay’ arrangement would ensure that government only pays for power that it needs, irrespective of quantity produced by the independent power producers.

When the Finance Minister announced that intent for that policy variation, it had generated hullabaloo with experts warning that such a variation could lead to serious suits from companies that already have suchlike contracts with government.

The Minister had however maintained a stolid stance on the issue.