The Institute of Economic Affairs (IEA) has said the 2020 Budget and Economic Policy is not ambitious enough to stimulate stabilization and growth.
Making a presentation today to state IEA’s position on the 2020 Budget, Director of Research at the institute, Dr. John Kwakye said the budget does not involve policies that would bring about fundamental changes that will help the country make the needed quantum development leaps over the medium term.
While Dr. Kwakye believes the 2020 budget is not ambitious enough to stimulate growth, Research Fellow with the Institute for Fiscal Studies, Dr. Adu Owusu Sarkodie thinks otherwise. Dr. Sarkodie had described as overly ambitious the government’s revenue targets for 2020.
The Finance Minister in the budget statement said the government is aiming at increasing the tax-to-GDP ratio from 13 percent to 20 percent in 2020.
This was against the backdrop that the GHS5 billion shortfall in government’s revenue target for July 2019.
Although the government has missed its revenue targets over the years, it is still hopeful that it can generate GHc67.1 billion in revenue in 2020.
The Finance Minister described this target as part of “radical policy and institutional reforms” towards raising the tax-to-GDP ratio over the medium term.
The government said there would be a focus on efficiency and base-broadening rather than imposing new taxes on people and businesses.
This is with a view to raising the domestic revenue towards achieving the Ghana Beyond Aid vision, the government explained.
But Dr. Adu Sarkodie said though the move is aimed at consolidating the gains made so far, the government may be promising more than it can deliver.
Currently, Ghana’s tax-to-GDP ratio of 12.9 percent in 2018 is below the average of middle-income countries.
Dr. Adu Sarkodie also observed that the reviews and upward adjustments to some taxes and levies announced will not have any significant strain on citizens.
Among other revenue measures, the government renewed and extended the National Fiscal Stabilisation Levy and Special Import Levies (SIL) for five years to support the Budget.