Economist Professor Godfred Bokpin is anticipating a rise in the country’s Value Added Tax (VAT) to as much as 18% or slightly lower in the 2025 budget, as the government considers scrapping certain taxes.

The expected removal of the E-Levy, COVID-19 levy, and betting tax has raised concerns about how the government intends to bridge the resulting revenue gap.

Speaking in an interview with Citi Business News, Professor Bokpin suggested that the government may extend VAT to cover financial services as part of efforts to offset the expected shortfall. He believes the government will also likely restructure the VAT system by merging the standard levies with the standard VAT rate. “One thing I am expecting the NDC to do, which I think they will, is to merge the standard levies with the standard VAT rate. We are talking about levies of almost 6% while the standard VAT rate is 15%, so I think they should merge it and peg it at 18% or below,” he explained.

Professor Bokpin cautioned that any VAT rate exceeding 18% could be counterproductive, as it would negatively impact productivity and affect low-income earners.

He stressed that the upcoming budget, the first for the Mahama-led administration, must consider reforms that meet the expectations of both the private and public sectors.

“There is a lot for them to consider in this budget, and probably the reason why the stakes are high. The private sector is expecting some reforms, the public sector is expecting some reforms in terms of service delivery, and more importantly, procurement measures and ensuring value for money in our public procurement processes will also be important,” he noted. As the new administration looks to “reset” the economy, President Mahama has pledged to scrap certain taxes while promising to cut wasteful spending and enforce fiscal discipline.