At a time that the federal government is looking for to improve the Growth & Sustainability Levy on mining firms, the Director of Research on the Institute of Economic Affairs (IEA), Dr John Kwakye, has described that specific tax as out of date.
He nevertheless welcomed the federal government’s determination to improve the levy.
The reality is that the Growth and Sustainability Tax is out of date, having been launched in 2001 as a Fiscal Stability Tax. However, a greater tax on the mining sector is justified. Indeed, what is required is a Super-profit or Windfall Tax of not less than 10%.
His feedback come at a time when Sulemana Koney, Chief Executive Officer (CEO) of the Ghana Chamber of Mines, criticised the federal government’s method, saying the industry was blindsided by the coverage shift.
“What concerns me most is the lack of consultation. I am aware of companies actively seeking investors to expand their operations and take advantage of high gold prices. Some of these investors have even approached me. Yet without warning, the government introduces a policy like this. We were only informed briefly yesterday (Monday) around 5:30 PM, with no clear explanation of the basis for this decision,” he defined.
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According to Mr. Koney, the federal government had beforehand recommended solely a marginal improve within the levy. The determination to maneuver from one % to 3 %, he mentioned, represents a drastic shift that might affect each present and potential investments.
“We understand the economy is struggling, but should the burden fall disproportionately on businesses that are already contributing through various taxes and levies?” he requested.
Similarly, a former Deputy Minister of Finance, Mona Quartey, has raised considerations over the federal government’s determination to improve the Growth & Sustainability Levy on mining firms from 1% to three%, warning of its potential affect on the extractive sector.
During the presentation of the 2025 Budget Statement on March 11, 2025, the Minister of Finance, Dr. Cassiel Ato Forson, justified the levy hike as a method to make sure Ghana advantages from rising international gold costs. He additionally proposed extending the sundown clause to 2028.
Speaking on Channel One TV on March 15, 2025, Mona Quartey acknowledged the necessity for income era however cautioned that the elevated levy might place undue strain on the industry at a crucial time.
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According to her, whereas the measure might present short-term advantages, it shouldn’t be extended, because the extractive sector performs an important function in Ghana’s financial restoration.
“In 2024, we noticed the extractive and oil industry making robust features by way of manufacturing, which is influenced not solely by value but in addition by manufacturing prices, utilities, labor, and consumables throughout the sector.
“That is why I’m considerably involved in regards to the Growth & Sustainability Levy on the extractive industry growing.
“I would like in any other case, however contemplating that our main supply of funding without delay comes from the tax refund account, and the federal government is making an attempt to navigate the fiscal area to generate income, this measure could also be crucial however just for the brief time period.
“This sector is crucial in helping Ghana recover from its debt crisis, as it brings in much-needed foreign currency,” she acknowledged.
The Finance Minister justified the determination to improve the levy.
He argued that Ghana had not sufficiently benefitted from its pure useful resource wealth. He identified that whereas pure useful resource lease accounts for about 14 % of gross home product (GDP), income from the extractive sector contributes just one.5 % of GDP.
“We have failed to leverage our natural wealth by capturing its rent and channelling it toward productive infrastructure and human capital,” Dr. Forson mentioned.
“Whereas global gold prices have seen some significant increase in recent times, Ghana has not been able to take full advantage of this development,” he added.