The Executive Director of the Institute for Economic Research and Public Policy (IERPP), Prof. Isaac Boadi, has commended government’s decision to abolish what he described as nuisance taxes but cautioned that measures must be taken to replace the lost revenue.
Speaking on Adom FM’s Dwaso Nsem following the presentation of the 2026 Mid-Year Budget Review, Prof. Boadi said the tax relief measures had reduced the burden on businesses and households while contributing to economic stability.
He specifically praised the removal of taxes such as the Electronic Transfer Levy (E-Levy), describing the move as a bold decision.
“There were some gains: economic stability and the removal of nuisance taxes. They did that, so we scored them 10 out of 10,” he said.
However, Prof. Boadi warned that government must urgently develop alternative revenue sources to make up for the income lost from the abolished taxes.
He explained that although some of the taxes were unpopular, they provided government with a reliable source of revenue.
“We lost GH¢60.4 billion by removing those taxes, so there should have been revenue replacement because the taxes are an easy way of generating revenue for the country. That is why we are not able to meet our revenue targets,” he stated.
The economist cautioned that failure to replace the lost revenue could affect government’s ability to finance development projects and deliver public services.
“The source of spontaneous revenue was scrapped and it was remarkable. But if there is no replacement and it affects development, the same people will start to complain,” he added.
Prof. Boadi also questioned government’s explanation of the country’s improved debt-to-GDP ratio, arguing that the decline was largely influenced by the rebasing of Ghana’s economy rather than a significant reduction in the country’s borrowing levels.
Using a simple analogy, he explained that increasing the size of the economy automatically lowers the debt ratio even if the debt itself remains high.
“When you divide one by two, you get 0.5. This means the upper figure is lower than the base,” he explained.
“What this country has done in 2026 is to rebase the economy. The figure at the bottom has widened from GH¢1.4 trillion to GH¢1.5 trillion, so when you divide, it will go down.”
He stressed that a lower debt-to-GDP ratio should not necessarily be interpreted as evidence that government borrowing had reduced.
“This does not mean you don’t borrow money, but the figure at the base becomes bigger,” he said.
Prof. Boadi also expressed concern about the recent movement in inflation and the exchange rate, suggesting that some of the earlier macroeconomic gains were beginning to reverse.
According to him, although inflation had initially declined, prices of goods and services continue to rise.
“With all the gains on inflation, when you go to the market, it has increased from 3.2 to 5.4. It’s going up again,” he said.
He also pointed to the depreciation of the cedi, noting that the exchange rate had started climbing after an earlier period of stability.
“The exchange rate came to 10, but now it is about 12,” he stated.
Prof. Boadi argued that some of the earlier improvements had been artificially sustained and were now returning to market levels.
“Because most of the things were artificially managed, it is taking a turn back and going back to how it used to be,” he said.
While acknowledging the government’s efforts to stabilise the economy and provide tax relief, the economist maintained that long-term fiscal sustainability would depend on replacing lost revenue and maintaining macroeconomic discipline.
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