Check out 16 key highlights from the 2022 budget statement
Finance Minister Ken Ofori-Atta presented the government’s budget statement and economic policy for 2022 to Parliament.
The tabling of the budget on Wednesday, November 17, 2021 was in accordance with Article 179 of the 1992 constitution.
In his presentation, he indicated that capital expenditure, funding of key government flagship programs, payroll and interest payments were identified as the main drivers of expenditure growth.
The minister also announced new taxes and other interventions to meet the domestic revenue target.
Here are some highlights:
1. Government services will see an upward adjustment of at least 15%
One of the government’s policy measures is a “review of fees and charges with an average increase of at least 15% in 2022 and then subjects it to automatic annual adjustments based on the average inflation rate as published by the Ghana Statistical Service, but with the prior consent of the Minister of Finance. Fees and charges should, however, be subject to a general review every five years. The effective date for implementation is January 1, 2022,” Mr. Ofori-Atta revealed.
2. Abolition of tolls on all public roads in the country
“To address these challenges, the government has abolished all tolls on public roads and bridges. This takes effect immediately after the approval of the budget,” the minister announced.
3. A 1.75% fee on all electronic transactions has been introduced
“After long deliberations, the government has decided to impose a tax on all electronic transactions in order to widen the tax net and stem the informal sector. This will be known as an “electronic transaction levy or electronic levy,” Ken Ofori-Atta said.
He said part of the proceeds will go to entrepreneurship and job creation.
4. One million jobs will be created under a new initiative called “YouStart”, with seed capital of GHS 1 billion
“The YouStart initiative which proposes to use GH¢1 billion each year to catalyze an ecosystem to create 1 million jobs and in partnership with financial institutions and development partners raise an additional 2 billion cedis,” said he declared.
5. Revenue and expenditure targets. The government has also targeted an overall (GDP) growth target for the year 2022 at 5.8%
The government aims to spend an estimated GHS 137.5 billion, while the GHS 100.5 billion is to be increased as total revenue for 2022.
“Total revenue and total subsidies and expenditure, the fiscal operations of 2022 will result in an overall fiscal deficit of GH¢37.012 billion, or 7.4% of GDP,” the minister said.
6. Less than 10% of Ghana’s 30.8 million people pay direct taxes
“Only 2,364,348 bear the burden of the entire population as taxpayers in August 2021,” Ken Ofori-Atta said.
7. Launching a common platform for property rate administration to improve the collection of property rates
“Government, through the Ghana Revenue Authority, will from January 2022 assist MMDAs to implement a common land rate administration platform to improve the collection of land rates and its responsibility”, underlined Ken Ofori-Atta.
8. COVID-19 increased public debt
“The situation has been aggravated by the sharp decline in revenue collected last year. Total revenue in 2020 fell by GH11.93 billion, or 3.1% of GDP, while total expenditure increased by GH14.08 billion, or 3.7% of GDP.
9. Review of baselines
“After two and a half years of operation, the temporary reference policy (discount) on imports introduced as a palliative measure has been reviewed to make it more effective and better targeted. This is in line with government policy to promote local industry
and improve foreign exchange earnings,” the minister stressed.
10. Development Bank Ghana Acquires License from Central Bank
“Mr. Mr. President, Government is pleased to announce the successful establishment and operationalization of the Development Bank Ghana (DBG). The DBG has received its operational license from the Bank of Ghana. The central bank has also completed its due diligence and endorsed DBG’s Board of Directors and key management personnel. DBG will support the private sector to ease long-term credit constraints for growth and expansion,” he announced.
11. Reduction of the withholding tax on the sale of raw gold
“For small-scale gold panning, reduce to 1.5% the withholding tax from 3.0% on the sale of unprocessed gold by small-scale gold panners from January 1, 2022,” the minister said.
12. Modified tax regime in the Income Tax Act
“Implement a modified tax regime in the Income Tax Act by raising the current turnover threshold from GH200,000 to GH500,000 for
business income of self-employed natural persons,” he announced.
13. Revision of the VAT Flat Rate System (VFRS)
“There will be a revision of the VRFS by applying the standard VAT rate to all businesses except retailers with a turnover threshold between
GH¢200,000-GH¢500,000 where VFRS will apply. The aim is to address the inequalities faced by domestic producers of local substitutes
vis-à-vis importers of similar products,” the minister said.
14. Electricity tariff reduction
“The government has reached agreements with some IPPs to convert power stations to toll structures, switch to natural gas and reduce tariffs. This should result in considerable savings for the government and the nation over the remaining life of the PPAs. These savings are expected to come from a combination of reduced capacity and energy loads across the portfolio,” Ofori-Atta said.
15. Budget labeled “Agyenkwa Budget”
“We would like to thank this august Chamber for the continuous support we have received over the years. We are counting on you for approval and support to implement our country’s transformation budget. Mr. President, I present to you the AGYENKWA Budget,” he announced.
16. A Two-year tax relief for textile manufacturers.