A new study Centre for Policy Scrutiny (CPS) has warned that Ghana stands to lose a staggering GH¢18.15 billion in revenue by 2027 following the abolition of key taxes, raising fresh concerns about the country’s already strained public finances and its ability to meet critical expenditure obligations.
The report, released by the Centre for Policy Scrutiny, highlights the significant fiscal implications of scrapping the Electronic Transfer Levy (E-Levy) and the COVID-19 Health Recovery Levy, even as it acknowledges that the move offers some relief to households and improves fairness in the tax system.
The findings were presented at a public lecture by fiscal policy specialist Isaac Danso Agyiri, who cautioned that the revenue losses could deepen Ghana’s fiscal challenges if not matched with strong alternative measures.
According to the study, the abolition of the E-Levy alone is projected to cost the country about GH¢8.2 billion in lost revenue by 2027, while the removal of the COVID-19 levy could wipe out an additional GH¢9.95 billion over the same period.
Together, these account for a combined shortfall of GH¢18.15 billion—an amount analysts say is substantial enough to significantly impact government operations.
The projected losses come at a time when Ghana’s fiscal position is already under severe pressure.
In 2025, total tax revenue stood at GH¢183 billion, but a large portion of this was locked into statutory and recurrent obligations.
Transfers to funds such as the District Assemblies Common Fund (DACF), Ghana Education Trust Fund (GETFund), National Health Insurance Levy (NHIL), along with debt servicing, consumed GH¢122.1 billion, leaving only GH¢61.9 billion for discretionary spending.
However, the public sector wage bill alone reached GH¢78.9 billion, far exceeding the remaining revenue.
This imbalance forced government to borrow approximately GH¢17 billion just to pay salaries, underscoring the depth of fiscal strain.
In effect, 44% of total tax revenue was absorbed by wages, significantly above the 35% threshold recommended by the Economic Community of West African States.
A broader breakdown of government finances further illustrates the challenge.
Compensation of employees accounts for 33% of total revenue, while debt servicing takes up 26% and statutory transfers absorb 24%.
Together, these three expenditure items consume 83% of all government revenue, leaving a narrow 17% to fund capital projects, goods and services, and social programmes.
As a result, capital expenditure receives just six percent of total revenue, goods and services take three percent, other expenditures account for seven percent, and social benefits are left with a mere one percent.
This structure leaves government with virtually no fiscal space, forcing it to rely heavily on borrowing not only for development projects but also for routine operations.
Historical data presented in the study shows that the wage burden has consistently weighed heavily on government finances. In 2016, wages accounted for 55% of tax revenue, followed by 52% in 2017 and 51.9% in 2018.
The trend persisted in subsequent years, peaking at 63.6% in 2020 before moderating to 44.45% in 2025.
Despite fluctuations, the data points to a persistent structural imbalance in public spending.
Against this backdrop, the removal of the E-Levy and COVID-19 levy represents a significant loss of relatively stable revenue streams.
Mr. Agyiri noted that the COVID-19 levy, embedded within the consumption tax framework, had proven to be a reliable source of revenue, generating over GH¢1.72 billion in 2022 and rising to about GH¢2.94 billion by 2024.
The E-Levy, introduced in 2022 to expand the tax net through digital transactions, initially underperformed but showed gradual improvement, with collections exceeding GH¢1.8 billion in 2024 before it was scrapped in April 2025.
Despite their contribution to revenue mobilisation, the study found that both taxes—particularly the E-Levy—raised significant equity concerns.
The levy was seen as disproportionately affecting low- and middle-income earners who rely heavily on mobile money for everyday transactions.
“The evidence suggests that while these taxes contributed to domestic revenue mobilisation, they also imposed uneven burdens across income groups. Their removal therefore improves equity and provides some relief to vulnerable households,” Mr. Agyiri explained.
The study also highlighted potential economic benefits from the tax removals.
The elimination of the E-Levy is expected to boost mobile money usage and deepen financial inclusion, while the removal of the COVID-19 levy could lower the tax component in prices, potentially reducing the cost of goods and services and stimulating consumer demand.
However, these gains come with a clear fiscal trade-off.
Mr. Agyiri warned that without well-designed compensatory measures, the GH¢18.15 billion revenue gap could place additional pressure on public finances and undermine government’s ability to meet its obligations.
The report noted that government has already begun implementing measures to improve revenue mobilisation, including reforms to the Value Added Tax system, enhanced compliance efforts, and adjustments to the tax refund regime. Nonetheless, it cautioned that these interventions may not fully offset the revenue losses from the abolished levies.
The study also assessed the impact of the betting tax, noting that its contribution to revenue was relatively insignificant. Collections ranged between GH¢78 million and GH¢80 million during its implementation—far below the projected GH¢1.2 billion annually—making its removal less consequential in fiscal terms.
Speaking at the event, Executive Director of the Centre for Policy Scrutiny, Adu Owusu Sarkodie, stressed the need for evidence-based tax policy decisions grounded in long-term sustainability.
He cautioned that while the removal of these taxes provides relief to citizens, policymakers must carefully weigh the revenue implications to avoid worsening fiscal imbalances.
The lecture, attended by policy analysts, academics, students, and civil society groups, forms part of ongoing efforts to deepen public understanding of tax policy and promote informed debate on Ghana’s economic future.
As Ghana navigates the delicate balance between easing the tax burden on citizens and maintaining fiscal stability, the findings of the study serve as a stark reminder that the cost of scrapping taxes—though politically appealing—can have far-reaching consequences for national development.
