Ghana’s Parliament has commenced debate on the government’s 2020 budget statement and economic policy.
In the document which was presented to the house last Wednesday, the government intends to generate some GHS 67.1 billion in revenue next year.
The Finance Minister Ken Ofori Atta’s presentation was met with agitations after roads in the Volta Region were omitted from the government’s critical infrastructure list.
He, however, tabled an amendment before the house last Friday to include roads in the region.
Minister for Parliamentary Affairs and Majority Leader, Osei Kyei Mensah Bonsu, says today’s debate will allow legislators to critically examine the 2020 budget before its passage.
“The budget is the most important economic policy to government and provides a comprehensive statement of priorities of a nation. As a legislative institution of the people, it falls on us to ensure that the budget optimally matches the needs of the nation with available resources. Effective legislative participation in budget processes establishes checks and balances that are crucial for transparent and accountable government and ensuring efficient delivery of public services.”
Parliament over the weekend began its post- budget workshop its to deliberate on the 2020 budget.
The workshop afforded Members of Parliament the opportunity to critically study the budget as presented to them by the Finance Minister to enable them to sufficiently debate it.
Content of budget
The Finance Minister in delivering the 2020 budget statement stressed a focus on fixing roads across the country in 2020 and beyond.
He also indicated, among others that the government will increase the tax-to-GDP ratio from 13 percent to 20 per cent in 2020.
This was after the government’s revenue target for July 2019 fell short by GHS 5 billion.
Although the government has missed its revenue targets over the years, it is still hopeful that it can generate GHS 67.1 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.
Revenue targets in budget over-ambitious – Economist
But, a Research Fellow with the Institute for Fiscal Studies, Dr. Adu Owusu Sarkodie, has described as overly ambitious government’s revenue targets for 2020.
He says though the move is aimed at consolidating the gains made so far, the government may be promising more than it can deliver.
“I mean how can you project to grow your tax revenue as a ratio of GDP from 13 percent to 20 percent in one year? That is a very over-ambitious statement to make because 20 percent is not something small you can achieve within a year.”
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.
“These are marginal. They are not too significant that they can cause a huge upsurge in inflation rate and disturbances in the Ghanaian economy. These are little things that we can accommodate.”
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.
CNR
