He stated that the government will next year freeze tax waivers given to foreign companies in the country and the move is the first step toward expenditure rationalization in the country.
Presenting the 2023 budget statement in Parliament on Thursday, November 24, 2022, Ofori-Atta indicated that the government has increased the country’s Value Added Tax (VAT) by 2.5 percent in 2023.
The proposal to increase the rate forms part of the government’s seven-point agenda to revitalize the economy, he noted.
The standard VAT rate is 12.5%, except for supplies of a wholesaler or retailer of goods, which are taxed at a total flat rate of 3%.
He also announced that the government will undertake major structural reforms in the public sector.
Regarding the economic challenges, he told Parliament that the government was determined to change the narrative after admitting that the economy has been going through troubles.
For the government’s determination to change the negative narrative and rebuild for a better future, here are 13 measures announced by Ofori-Atta in the 2023 budget statement and economic policy to reduce public expenditure.
- Increase the VAT rate by 2.5 percent to directly support our roads and digitalization agenda.
- Review the E-Levy Act and more specifically, reduce the headline rate from 1.5% to one percent (1%) of the transaction value as well as remove the daily threshold.
- Government-sponsored external training and Staff Development activities at the Office of the President, Ministries, and SOEs must be put on hold for the 2023 financial year.
- A ban on the use of V8s/V6s or its equivalent except for cross-country travel. All government vehicles would be registered with GV green number plates from January 2023.
- Limited budgetary allocation for the purchase of vehicles. For the avoidance of doubt, the purchase of new vehicles shall be restricted to locally assembled vehicles.
- Only essential official foreign travel across government including SOEs shall be allowed. No official foreign travel shall be allowed for board members. Accordingly, all government institutions should submit a travel plan for the year 2023 by mid-December of all expected travels to the Chief of Staff by.
- As far as possible, meetings and workshops should be done within the official environment or government facilities.
- All MDAs, MMDAs, and SOEs are directed to reduce fuel allocations to Political Appointees and heads of MDAs, MMDAs, and SOEs by 50%. This directive applies to all methods of fuel allocation including coupons, electronic cards, chit systems, and fuel depots. Accordingly, 50% of the previous year’s (2022) budget allocation for fuel shall be earmarked for official business about MDAs, MMDAs, and SOES.
- Reduction of expenditure on appointments including salary freezes together with suspension of certain allowances like housing, utilities, clothing, etc.
- A freeze on new tax waivers for foreign companies and review of tax exemptions for the free zone, mining, oil, and gas companies.
- All non-critical projects must be suspended for the 2023 Financial year.
- No new government agencies shall be established in 2023.
- There shall be no hampers for 2022.
- There shall be no printing of diaries, notepads, calendars, and other promotional merchandise by MDAs, MMDAs, and SOEs for 2024.
- Freeze employment for civil and public servants.