Cedi gains could hurt import tax revenue – Analyst warns
The recent strengthening of the Ghana cedi may be good news for importers, but it could spell trouble for government revenue, according to economic analyst Emmanuel Boateng.
Speaking on the Business Breakfast show on Zed FM, Mr. Boateng explained that as the cedi appreciates against major currencies like the US dollar, the cedi value of imported goods drops, leading to lower tax assessments at the ports.
“Because taxes such as VAT and import duties are calculated based on the cedi value of goods, a stronger currency means the government collects less in taxes,” he said.
Mr. Boateng illustrated the impact with a simple example:
“If you previously needed GH₵14,000 to import goods worth $1,000 and now only need GH₵10,000, the taxable base reduces. VAT at 5% on GH₵14,000 is GH₵700, but on GH₵10,000, it’s just GH₵500.”
He pointed out that while GH₵200 might seem negligible, the cumulative effect across thousands of transactions could significantly reduce government income.
Although a stronger cedi reduces costs for businesses and consumers, Mr. Boateng cautioned that it presents a challenge for tax collection in an economy heavily dependent on import-based revenue. “Our tax system leans too much on imports. This is a trend policymakers need to monitor closely,” he stressed, urging government to explore more sustainable, diversified revenue sources.
