The government has finally scrapped the controversial pandemic tax, the COVID-19 Levy, as part of its wider 2026 budget reforms. The removal of the COVID-19 Health Recovery levy, which applied to goods, services, and imports, is a major highlight of the 2026 Budget and is seen as a key step toward easing economic pressure on both businesses and consumers.
Impact on Import Duties
The abolition of the levy provides direct relief on the cost of imports.
- Removal of the 1% Charge: The COVID-19 Levy Act, 2021 (Act 1068) imposed a 1% levy on the import of goods and services. Its removal means this specific 1% charge is eliminated from the total tax component of imports.
- Reduced Tax Base: Prior to its removal, the 1% COVID-19 Levy was included in the tax base upon which the Value Added Tax (VAT) was calculated. Eliminating the levy therefore lowers the overall value used for calculating the total VAT and other related levies (NHIL and GETFund), ultimately reducing the total import duty paid at the port.
- Simpler Taxation: The original levy was not subject to input tax deduction, meaning it became a direct, non-recoverable business cost. Its abolition and the wider reform to treat levies like GETFund and NHIL as part of the VAT system, allowing input deductions, will simplify the tax regime for businesses, especially importers, and reduce operational costs.
Impact on Consumer Prices
Finance Minister Dr. Cassiel Ato Forson announced that the levy’s removal is expected to put GH₵3.7 billion back into the hands of individuals and businesses in 2026, contributing to an expected GH₵5.7 billion return to the economy through wider reforms.
- Cost Reduction Potential: Since the levy was applied to imports and domestic supplies of goods and services, its removal directly lowers the cost of production and importation. This reduction in business cost is intended to be passed on to the consumer.
- Lower Final Prices: The levy’s initial unpopularity stemmed from the fact that it increased prices for consumers. Its removal is now expected to have a downward pressure on the prices of a wide array of goods and services, which should increase household income and contribute to a general easing of the cost of living.
- VAT Simplification: The government is coupling the levy’s abolition with wider tax reforms, including lowering the effective VAT rate and raising the VAT threshold. This comprehensive approach is designed to further reduce cascading effects of taxation and accelerate the decrease in consumer prices.
Government & IMF Stance
The decision to abolish the levy has gained strong support from the International Monetary Fund (IMF), strengthening the government’s confidence in proceeding with the reforms, which will be highlighted in the mid-year budget review.
Edward Apenteng Gyamera, Commissioner of the Domestic Tax Revenue Division, explained that the reform is part of a united position with the IMF and business associations to address VAT components that hurt business growth. Business groups have expressed confidence that the reforms will ease tax pressure while supporting revenue mobilization.
The levy was originally introduced to support COVID-19 expenses. However, as the economy recovered, it became an unpopular and burdensome tax. Many citizens and businesses now welcome its removal, seeing it as a necessary relief that should have happened long ago.
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