News:
March 12, 2025
In a bold financial maneuver, Ghana’s Minister of Finance, Dr. Cassiel Ato Forson, has redirected portions of the country’s tax refund allocations to fund critical government policies in the 2025 budget. This move, aimed at strengthening social interventions and reducing tax burdens, has sparked national discussions on fiscal discipline and the ethical use of public funds.
During a recent briefing on JoyNews after the presentation of the budget to parliament, Dr. Forson revealed a striking misuse of funds within Ghana’s tax refund system. The Revenue Administration Act, introduced in 2016 under former Finance Minister Seth Terkper, mandated that 6% of all revenue be set aside for tax refunds. However, an internal review of the account showed that from 2017 to 2024, only 43% of the accumulated GH₵26 billion had been used for its intended purpose.
The remaining 57%, amounting to over GH₵14 billion, was allegedly misapplied. According to the finance minister, this misallocation raised serious concerns about the management of public funds and the potential impact on taxpayer confidence. “We cannot continue this practice,” Dr. Forson emphasized, signaling a shift towards greater fiscal accountability.
To rectify this issue, the government has decided to reduce the tax refund allocation from 6% to 4%, freeing up GH₵3.8 billion in the 2025 budget. The finance minister strategically directed these funds towards social interventions and tax relief measures, ensuring that the reallocated resources directly benefit the Ghanaian people.
The breakdown of the reallocation is as follows:
- Abolishing the E-Levy would result in a revenue loss of GH₵1.9 billion from the GH₵3.8 billion reallocated fund, but it aims to ease financial burdens on individuals and businesses.
- Scrapping the betting tax would lead to a revenue loss of GH₵180 million.
- After these deductions, the government would still have GH₵1.7 billion remaining for critical social interventions.
- Social Interventions (GH₵1.7 billion total):
- Local Governance Support (Assembly Members Allowances): GH₵100 million was granted to assembly members to enhance local development initiatives.
- Sanitary Pad Distribution: GH₵499.5 million was allocated to provide free sanitary pads for schoolgirls, addressing menstrual health challenges.
- Capitation Grant Increase: A 73% increase in the capitation grant was funded to support basic education.
- Textbooks and School Feeding: Additional funds were directed towards improving textbook availability and expanding the school feeding program.
Dr. Forson’s approach represents a shift in Ghana’s fiscal management, prioritizing direct social benefits over unchecked bureaucratic expenditures. By repurposing funds from a historically mismanaged account, the Finance Ministry has demonstrated a commitment to financial prudence and equitable resource distribution.
However, the move raises questions about long-term sustainability. Will reducing the tax refund allocation create future financial gaps? These concerns highlight the need for transparent oversight and structured financial planning to prevent unintended economic disruptions.
Ghana’s 2025 budget reflects a deliberate effort to balance economic efficiency with social responsibility. Dr. Cassiel Ato Forson’s financial engineering has enabled the government to abolish unpopular taxes while funding essential social programs. As the nation moves forward, ensuring accountability in fund utilization will be crucial to sustaining public trust and economic stability.
The real test lies ahead: will this strategy yield the intended benefits without compromising fiscal integrity? Only time will tell.
Shang Annang Papa Nii/Ghanamps.com