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The Government of Ghana has announced plans to scrap the much-criticised COVID-19 Health Recovery Levy, signalling the end of a tax policy that had faced widespread opposition since its inception in 2021.
The 1% levy, which was applied to the supply of goods and services as well as imports, was initially introduced to support Ghana’s economic recovery from the impacts of the COVID-19 pandemic. However, as the pandemic waned and daily life returned to normal, many Ghanaians questioned the continued relevance of the tax.
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While presenting the 2025 Budget Statement in Parliament, the Finance Minister, Dr Cassiel Ato Forson, confirmed the government’s decision to eliminate the levy, often labelled a nuisance tax.
Mr Speaker, the parameters for the VAT reforms, which will be completed this year, will include: abolishing the COVID-19 Levy, he announced.
He further explained that the move formed part of broader efforts by the government to reduce the tax burden on citizens and stimulate economic growth.
Mr Speaker, aside from the high VAT rate, businesses are not permitted by law to claim their input for the NHIL, GETFund Levy and COVID-19 Levy, compounding the burden on households, Dr Forson added.
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Since its implementation, the COVID-19 levy had drawn significant criticism from civil society organisations, trade unions, and opposition Members of Parliament. Many argued that it imposed an unfair financial strain on both consumers and businesses, especially as questions lingered over how the funds were utilised.
With the levy now abolished, a pre-budget analysis conducted by auditing and accounting firm KPMG estimates that the government could forgo as much as GH¢6.4 billion in revenue if both the COVID-19 Levy and the Electronic Transfer Levy (E-Levy) are removed in the 2025 fiscal year.