Only Way To Deal With Our Fiscal Deficit Is By Increasing Taxes - Dep Finance Minister

Deputy Minister of Finance, Hon. Cassiel Ato Baah Forson has explained the rationale behind the introduction of the Special Petroleum Tax of 17.5 percent, saying it is one of the means to stop or reduce the rising fiscal deficit in the country. According to the MP for Ajumako Enyan Essiam, the 2015 budget is aiming at addressing the economic challenges of the country, before it festers into a crisis by introducing some measures to raise revenue internally. Speaking on Okay Fm’s Ade Akye Abia Morning Show, Hon. Ato Baah Forson admitted that the budget deficit needs to be controlled. He said there is a projection that the 2015 budget should be able to raise total revenue of 24 per cent of GDP which is equivalent to GH˘33 billion against the country’s expenditure totaling GH˘41.4 billion, representing 30.5 per cent GDP. Per the analysis, he said the country will be running a budget deficit of 6.5 per cent GDP, coming from 9.5 per cent budget deficit from the previous year; thus, the 2015 budget will help the country’s deficit to decline by 3 percentage point, describing the action as a bold step. He again projected that GH˘1.6 billion out of the GH˘41.4 billion will be used to clear all arrears in the country. Insisting that, in order to raise revenue to deal with the fiscal deficit, it should come by extending the national fiscal stabilization tax till the end of 2017; by extending the Special Import Levy till the end of 2017 and the introduction of Special Petroleum tax of 17.5 per cent. He however explained that the new tax on petroleum will still operate around the laws of Acts 870 which will make VAT registered companies to claim Input Tax Credit whenever they buy petrol on 17.5 per cent tax, making them pay a little more. He hinted that there is tax exemption on premix fuel and commercial drivers will buy petrol and diesel by only 3 per cent. “We incur the deficit and it will take us to internally raise revenue to reduce the country’s deficit; the only way is by increasing taxes a little bit”, he explained.