Government abolishes COVID-19 Levy; Ghanaians to save GH¢3.7 billion – Ato Forson

The Minister of Finance, Dr Cassiel Ato Forson, has announced the government’s decision to abolish the controversial COVID-19 Health Recovery Levy in fulfilment of President John Mahama’s campaign promise ahead of the 2024 general election.

Presenting the 2026 Budget and Economic Policy Statement in Parliament, Dr Forson stated that the removal of the levy will save over GH¢3.7 billion for Ghanaians.

He also outlined a series of tax reforms aimed at stimulating growth and easing the burden on individuals and businesses. These include scrapping VAT on recognisance and mineral prospecting, reducing the effective VAT rate from 21.9% to 20%, and raising the VAT registration threshold from GH¢200,000 to GH¢750,000.

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Dr Forson said:

Mr Speaker, after months of detailed analysis and broad consultations with stakeholders, we have completed the design of a modernised VAT system that aligns with Ghana’s economic transformation agenda.

The government is therefore submitting to this House a bold package of VAT reforms to make our tax system more equitable, transparent, and business-friendly.

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Detailing the reforms, he added that the government will:

• Abolish the COVID-19 Health Recovery Levy

• Remove the decoupling of the National Health Insurance and GETFund levies from the VAT base

• Abolish VAT on recognisance and mineral prospecting

• Reduce the effective VAT rate from 21.9% to 20%

• Raise the VAT registration threshold to GH¢750,000

• Extend VAT zero-rating on local textile manufacturing to 2028

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Confirming the impact of the move, Dr Forson said:

By abolishing the COVID-19 levy, the government is putting GH¢3.7 billion back into the pockets of individuals and businesses in 2026. These reforms will also reduce the cost of doing business and support our economic recovery efforts.

He further noted that the entire VAT reform package is expected to return nearly GH¢6 billion to businesses and households.

The COVID-19 Health Recovery Levy, enacted under Act 1068 on 31 March 2021, imposed a 1% charge on the supply of goods and services made in Ghana as well as imports, excluding exempt goods and services.

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It was introduced to raise revenue to support pandemic-related expenditures and plug fiscal deficits. However, its continued collection long after the pandemic ended had sparked widespread public criticism.