COVID-19 Health Levy Not To Defray Cost Of Free Water, Electricity – Finance Ministry

The newly approved COVID-19 Health levy which will see the VAT Flat rate as well the National Health Insurance Levy adjusted upwards, will not be used for paying the free water and electricity given to the public in 2020.

This is according to a statement released by the Ministry of Finance.

The Ministry says the claims as being perceived by the public is inaccurate.

Information Minister, Kojo Oppong Nkrumah had earlier indicated that the government’s proposed new taxes are to help address the huge fiscal gap created as a result of the government’s COVID-19 expenses.

He said the government spent about GH¢ 19 billion of borrowed funds to provide free water and free electricity among other expenses to fight the COVID-19 pandemic and that amount must be repaid.

But the Finance Ministry in its statement clarified what the minister insinuated.

“The Ministry also noted media reports suggesting that government has announced that the COVID-19 levy is to be utilized in paying for free water and electricity of 2020. Again this is incorrect. The Minister of Information’s comment to the effect that COVID-19 expenses include water and electricity ought not to be misconstrued to mean the new taxes of 2021 are direct charge for those services,” the statement said.

In a related development, the Ministry also denied media reports suggesting that the government has so far spent GHS 1.7 billion on the COVID-19 pandemic.

Media reports had suggested even though GHS 2.5 billion was approved for the 2021 budget on Coronavirus Alleviation Program (CAP) to support households, relief to health workers, soft loans for micro, small and medium enterprise, only GHS 1.7 billion was utilized.

The Ministry in a statement however dismissed this claim.

It explained that the said GHS 1.7 million highlights expenditures on only two items under the COVID-19 related programmes.

“The Ministry hereby informs the general public that these publications are incorrect. The GH 1.7 billion reflects expenditures on only two items under the COVID-19 related expenditures, namely, COVID-19 Alleviation Programme 1 (CAP1) and Emergency Preparedness and Response Plan 1. Other COVID-19 expenditures were COVID-19 Alleviation Programme 2 (CAP2), COVID-19 Preparedness Plan 2, Provision of Health Infrastructure, Seed Fund Capitalization of Development Bank, among others.”

Member of Parliament (MP) for Yapei-Kusawgu, John Abdulai Jinapor has also taken on the government for pegging the fiscal impact of COVID-19 expenditure at GHS19 billion.

The legislator says the claim is false.

In a release to raise the alarm, Mr. Jinapor said, although the amount was the budgeted figure, only GHS 1.7 billion was used based on the government’s own 2021 budget statement presented to Parliament.

John Jinapor also mentioned that it is even difficult to understand why the government will pretend to have heavily spent to manage the health crisis and attribute current economic challenges to the pandemic.’

Full statement below:

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