The emergence of coronavirus has impacted every productive sector of the economy with data showing that revenue generated from domestic taxes (non-oil) from January to October 2019 performed better than in the same period the previous year when there was no pandemic.
The report shows that domestic tax revenue which includes revenue generated from Customs, direct taxes (IRS), and indirect taxes (VAT) – recorded more than GH¢31.3billion in October 2020, compared to the GH¢29.3billion recorded in the same period last year – representing a 6.6 percentage points increase. The analysis with the exception of VAT and the other two domestic tax revenue generation activities – Customs and direct tax – saw increases in their values during the second quarter when restrictions on the movement of persons and closure of some businesses were partially lifted.
The report indicated that Customs receipts recorded GH¢2.6billion in the second-quarter 2020 as compared with the GH¢1.7billion in the first-quarter; direct taxes also recorded GH¢4.4-billion in the second quarter as compared to GH¢3.7bn in the previous quarter. However, that could not be said of indirect taxes (VAT), as revenue declined to GH¢1.9billion from the GH¢2.1billion recorded in the first quarter.
In the third-quarter VAT, receipts bounced back to GH¢2.2-billion due to increased economic activity in the country following the lifting of all restrictions. However, direct tax revenue saw a marginal decline in the third quarter, recording GH¢4.3billion. With regard to receipts from Customs, they recorded increments in revenue for all three quarters under discussion. This takes domestic tax revenue generated from all three sectors to GH¢27.1billion as of third-quarter 2020, with the October 2020 figure taking the total to GH¢31.3billion for the first 10 months of the pandemic year.
Government, in the mid-year budget, revised total non-oil tax revenue to GH¢40.7billion (10.6 percent of GDP), which is GH¢4.3billion lower than the pre-pandemic budget target of GH¢45billion. The revision, according to the budget, was on account of a significant shortfall in import duties as well as shortfalls in both the domestic direct and indirect taxes. Total revenue and grants have also been revised to GH¢53.7billion (13.9 percent of GDP) in 2020, representing a 20 percent decrease over the original 2020 Budget target of GH¢67.1billion.
All these points to the impact the pandemic had on economic activities during the first wave, which subsequently sent the country into its first recession in nearly four decades.