Dr Kwakye describes Growth & Sustainability Levy as obsolete

At a time that the government is seeking to increase the Growth & Sustainability Levy on mining companies, the Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, has described that particular tax as obsolete.

He however welcomed the government’s decision to increase the levy.

The fact is that the Growth and Sustainability Tax is obsolete, having been introduced in 2001 as a Fiscal Stability Tax. However, a higher tax on the mining sector is justified. Indeed, what is needed is a Super-profit or Windfall Tax of at least 10%.

His comments come at a time when Sulemana Koney, Chief Executive Officer (CEO) of the Ghana Chamber of Mines, criticised the government’s approach, saying the industry was blindsided by the policy shift.

“What concerns me most is the lack of consultation. I am aware of companies actively seeking investors to expand their operations and take advantage of high gold prices. Some of these investors have even approached me. Yet without warning, the government introduces a policy like this. We were only informed briefly yesterday (Monday) around 5:30 PM, with no clear explanation of the basis for this decision,” he explained.

READ ALSO:A higher tax on the mining sector is justified – John Kwakye

According to Mr. Koney, the government had previously suggested only a marginal increase in the levy. The decision to move from one percent to three percent, he said, represents a drastic shift that could impact both existing and prospective investments.

“We understand the economy is struggling, but should the burden fall disproportionately on businesses that are already contributing through various taxes and levies?” he asked.

Similarly, a former Deputy Minister of Finance, Mona Quartey, has raised concerns over the government’s decision to increase the Growth & Sustainability Levy on mining companies from 1% to 3%, warning of its potential impact on the extractive sector.

During the presentation of the 2025 Budget Statement on March 11, 2025, the Minister of Finance, Dr. Cassiel Ato Forson, justified the levy hike as a strategy to ensure Ghana benefits from rising global gold prices. He also proposed extending the sunset clause to 2028.

Speaking on Channel One TV on March 15, 2025, Mona Quartey acknowledged the need for revenue generation but cautioned that the increased levy could place undue pressure on the industry at a critical time.

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According to her, while the measure may provide short-term benefits, it should not be prolonged, as the extractive sector plays a crucial role in Ghana’s economic recovery.

“In 2024, we saw the extractive and oil industry making strong gains in terms of production, which is influenced not only by price but also by production costs, utilities, labor, and consumables within the sector.

“That is why I am somewhat concerned about the Growth & Sustainability Levy on the extractive industry increasing.

“I would prefer otherwise, but considering that our major source of funding right now comes from the tax refund account, and the government is trying to navigate the fiscal space to generate revenue, this measure may be necessary but only for the short term.

“This sector is crucial in helping Ghana recover from its debt crisis, as it brings in much-needed foreign currency,” she stated.

The Finance Minister justified the decision to increase the levy.

He argued that Ghana had not sufficiently benefitted from its natural resource wealth. He pointed out that while natural resource rent accounts for about 14 percent of gross domestic product (GDP), revenue from the extractive sector contributes only 1.5 percent of GDP.

“We have failed to leverage our natural wealth by capturing its rent and channelling it toward productive infrastructure and human capital,” Dr. Forson said.

“Whereas global gold prices have seen some significant increase in recent times, Ghana has not been able to take full advantage of this development,” he added.

The post Dr Kwakye describes Growth & Sustainability Levy as obsolete first appeared on 3News.

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