Concerns Arise Over Proposed Scrapping of Betting Tax in Ghana

The recent announcement by Ghana’s newly-elected President John Mahama about scrapping the 10% betting tax has sparked a significant debate in the country.

This tax, implemented in August 2023, is levied on all betting winnings, with the deduction occurring automatically at the point of payout, thereby excluding instances of cancelled or failed bets. As part of a broader initiative aimed at eliminating what the government deems ‘nuisance taxes,’ this proposal has drawn attention from various economic stakeholders, particularly the Institute of Economic Affairs (IEA), which has raised concerns regarding its implications.

The IEA posits that the betting tax plays a crucial role in two significant areas: revenue generation and acting as a deterrent against problem gambling. With the betting industry in Ghana continuing to grow, the tax serves as an essential source of government revenue. Its removal could potentially lead to a significant financial shortfall at a time when fiscal stability is already a pressing concern for the country. Recent analysis by KPMG indicates that the simultaneous abolition of the betting tax, alongside the electronic transaction levy (e-levy) and the COVID-19 levy, could result in a staggering loss of approximately GHS 6.4 billion (around $410 million). This projection raises critical questions about the sustainability of public finances if such reductions are enacted without viable revenue replacement strategies.

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While there is broader public support for the elimination of certain levies, such as the e-levy and the COVID-19 levy, opposition to the removal of the betting tax underscores a deeper complexity in public sentiment and economic realities. Critics argue that the government’s initiative, although well-intentioned in providing fiscal relief, risks undermining vital financial structures that help regulate gambling practices in the nation. In light of these concerns, the IEA has proposed a compromise: a reduction of the betting tax to 5% rather than full abolition. This middle-ground approach seeks to balance the need for continued revenue generation with the government’s objective of reducing the tax burden on citizens.

As President Mahama’s administration collaborates closely with the International Monetary Fund (IMF) to stabilize the economy, it faces the challenge of finding the right balance between fostering economic growth and addressing the fiscal realities of public finance. The proposed scrapping of the betting tax represents just one element of a larger policy initiative, and the responses from organizations like the IEA emphasize the importance of considering the multifaceted impacts of tax policy changes.

In the coming weeks, discussions will be critical as various stakeholders continue to voice their opinions on the best path forward for Ghana’s economic landscape. As the debate surrounding the betting tax intensifies, it is essential for the government to engage with economic experts, civil society, and the business community to craft policies that are not only visionary but also sustainable.