2025 Budget: IEA urges Govt to retain Betting Tax, Proposes 5% rate cut

The Institute of Economic Affairs (IEA) has urged the government to retain the Betting Tax at a reduced rate of 5% ahead of the 2025 Budget presentation, arguing it supports revenue generation and curbs excessive gambling. This comes despite the administration's promise to abolish the tax along with the E-Levy, COVID-19 Levy, and Emissions Tax.

The IEA highlights Ghana’s low tax revenue-to-GDP ratio (13-14%), which lags behind middle-income peers (20-25%), necessitating measures to expand the tax base.

To compensate for potential revenue losses from tax cuts, it suggests plugging tax loopholes, introducing an e-commerce tax, and imposing windfall taxes on highly profitable sectors like extractive industries, telecoms, and banking.

However, the think tank warns that Ghana’s limited GDP (about GHS 1 trillion) constrains domestic revenue potential. It calls for renegotiated fiscal terms in the natural resource sector and value addition to boost long-term revenue.

On the expenditure side, the IEA stresses the need for fiscal discipline while protecting essential sectors like health and education. It urges the government to increase capital expenditure (CAPEX) from the current 3-4% of GDP to at least 10% over the medium term to drive growth and job creation.

Additionally, it supports the establishment of an Independent Value-for-Money Department (IVMD), estimating that addressing inefficiencies and inflated costs could save Ghana 3-4% of GDP equivalent to the entire current CAPEX budget.

The 2025 Budget is expected to be a defining moment for Ghana’s fiscal strategy, balancing tax policy adjustments with spending reforms to ensure sustainable economic growth.