Government Abolishes Emission Levy, VAT on Insurance, and Withholding Tax in 2025 Budget

In a bold policy move aimed at alleviating economic pressure on businesses and individuals, the government has announced the abolition of the Emission Levy, VAT on motor vehicle insurance policies, and the 1.5% withholding tax on unprocessed gold winnings by small-scale miners.

These tax reforms, outlined in the 2025 budget statement by Finance Minister Dr. Cassiel Ato Forson, are part of the administration’s broader agenda to reduce the financial burden on citizens and stimulate economic growth.

The Emission Levy, which was imposed on industries and vehicle owners to curb environmental pollution, has been scrapped. The tax was widely criticised for increasing operational costs for businesses and vehicle owners, leading to higher prices for goods and services.

The government believes that removing this levy will provide relief to businesses, reduce transportation costs, and encourage industrial expansion.

The Value Added Tax (VAT) on motor vehicle insurance policies has also been abolished. Previously, this tax increased the cost of vehicle insurance, making it expensive for both private and commercial vehicle owners.

By eliminating the VAT, the government aims to reduce insurance costs, encourage compliance with mandatory vehicle insurance laws, and enhance road safety by ensuring more vehicles are adequately insured.

In a major relief for small-scale miners, the government has removed the 1.5% withholding tax on winnings from unprocessed gold. T

This tax had been a point of contention among miners, who argued that it discouraged legal gold trading and drove many operators into the informal sector.

The government hopes that abolishing the tax will promote formal gold trade, increase revenue from properly regulated mining activities, and enhance transparency in the sector.

Dr. Forson emphasised that these tax cuts align with the government’s commitment to creating a more business-friendly environment.

“The removal of these taxes will ease the financial burden on businesses and individuals, stimulate economic activity, and improve compliance within various industries,” he stated.

However, concerns have been raised about how the government will compensate for the revenue loss resulting from these tax abolitions. The finance minister assured Parliament that alternative revenue measures, including enhanced tax compliance strategies and economic expansion initiatives, would be implemented to offset any potential shortfall.

The announcement has been met with mixed reactions. Business owners and vehicle operators have welcomed the decision, seeing it as a step toward economic relief. Small-scale miners have also praised the move, stating that it will encourage more legal mining activities. However, some economic analysts caution that while these tax cuts provide immediate relief, the government must ensure a sustainable revenue stream to maintain fiscal stability.

The abolition of the Emission Levy, VAT on vehicle insurance, and withholding tax on unprocessed gold signals a major shift in the government’s tax policy, focusing on reducing financial burdens while fostering economic growth. As the implementation of these tax reforms unfolds, stakeholders will be closely monitoring their impact on businesses, consumers, and overall revenue generation.

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