Business News of Monday, 17 July 2017
Government ended the first four months of the year missing out on its revenue target, latest fiscal data covering government’s financial operations ending April 2017 has revealed.
According to the data, the state got GH¢10 billion from domestic revenue as against the GH¢12 billion target.
However, when grants are added to the total revenue, government also realised GH¢11 billion which is still below what it has programmed for.
This was still short of the GH¢13.2 billion it was hoping to realise.
A careful look at the fiscal data showed that government missed out on meeting the target set for most of the various tax types.
For instance, the state was hoping to get GH¢10 billion in tax revenue but actually got GH¢8.7 billion.
The finance ministry was projecting GH¢1.7 billion from company taxes, but it was just able to gross GH¢1.3 billion.
Mining royalties and airport tax were some of the few tax types that were able to grow more than what was programmed in the 2017 budget.
Reactions to revenue performance
An economist with the Institute of Fiscal Studies, Leslie Dwight-Mensah, told JOYBUSINESS that the challenge with the revenue numbers had nothing to do with recent tax cuts.
“This is because the necessary amendments to the tax cuts announced by the finance minister were implemented from April and this data is from January to April this year,” he said.
He, however, maintained that the performance of the economy for last year was still impacting on the operations of businesses in the country as well as over optimism on the part of government of revenue target.
Dwight-Mensah maintained that there might be the need to review some of the tax exemptions granted to businesses to help make up for these shortfalls.
Government‘s expenditure for 4 months of 2017
On the brighter side, there was something to smile about, as government was keeping expenses under control. Although it planned to spend almost GH¢17 billion, it actually spent GH¢13.4 billion by the end of April.
This was due to savings made in controlling the wage bill; government programmed to spend some GH¢5.2 billion as total compensation for public sector workers but actually spent just GH¢5 billion.
Expenditure on goods and services reached GH¢146 million instead as against a programmed target of GH¢792 million.
Overall balance stood at the end of April stood GH¢3 billion, compared to the GH¢4.4 billion programmed.
This was even below the budget deficit that was programmed by government for the first four months of this year.
Response from government and GRA
According to persons close to government some measures being instituted would help improve the revenue from next month.
JOYBUSINESS understands revenue numbers for May and even June were still below target or what was programmed.
But officials at the Ghana Revenue Authority (GRA) told JOYBUSINESS that the revenue was sometimes not good in first half of the year, but actually improve in the second half of the year.
Some of them also maintained that a lot of businesses were yet to appreciate and connect with the new government in terms of policy and appreciate how they were planning to stabilise and manage the economy.