IEA Says Levy Reduction Could Weaken Ghana’s Mining Revenue Base

The Institute of Economic Affairs (IEA) has raised concerns that Ghana may be weakening its long-term earnings from the mining sector following the government’s decision to reduce the Growth and Sustainability Levy from three per cent to one per cent, warning that the move could undermine value capture at a time of record mineral revenues.

At a press briefing in Accra, the policy think tank cautioned that although the extractive sector continues to deliver significant inflows to the state, recent fiscal adjustments risk shrinking the country’s overall take from its mineral wealth.

The concern comes against the backdrop of strong mining sector contributions to public finances. Data from the Ghana Chamber of Mines shows that producing members paid GH₵54.74 billion to government between 2014 and 2024, equivalent to over US$7.5 billion.

Corporate income tax accounted for the largest share at GH₵30.51 billion, followed by GH₵15.06 billion in mineral royalties, GH₵6.83 billion in employee income taxes, GH₵2.05 billion in dividends, and GH₵4.38 billion from taxes linked to self-employed workers in the sector.

Despite these strong inflows, the IEA argues that Ghana’s fiscal framework is at risk of losing efficiency in capturing value from rising global commodity prices, particularly gold, which is currently trading above US$4,500 per ounce, placing the country at the top royalty bracket of 12 per cent under its sliding-scale regime.

Distinguished Fellow of the IEA and former Chief Justice, Sophia Akuffo, questioned the policy direction, arguing that the reduction in the levy contradicts efforts to maximise national benefit from natural resources.

She noted that while Ghana has strengthened royalties and other fiscal instruments over time, the simultaneous reduction of the Growth and Sustainability Levy effectively offsets those gains, reducing a key revenue stream by two-thirds.

“Why did government increase royalties to capture greater value from Ghana’s mineral wealth, only to simultaneously dilute that gain through tax concessions?” she asked.

The IEA further warned that Ghana’s persistent fiscal pressures—including rising debt obligations and recurring reliance on external financial support—underscore the need for stronger resource governance rather than reduced taxation in high-performing sectors.

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It referenced concerns over recent fiscal strain, including proposals by the Finance Minister to raise substantial domestic financing to meet public sector obligations, arguing that improved resource mobilisation from mining could ease such pressures.

The think tank maintained that Ghana is currently at a strategic crossroads, with expiring mining leases, historically high global commodity prices, and new discoveries of critical minerals presenting a rare opportunity to renegotiate terms in favour of national development.

It cited international examples such as Botswana, Chile, Burkina Faso and Venezuela, where governments have adjusted ownership structures or fiscal regimes to increase state benefit from extractive industries without necessarily discouraging investment.

According to the IEA, Ghana must adopt a more consistent and balanced fiscal approach that safeguards investor confidence while ensuring the country retains a greater share of value generated from its natural resources.

The debate over the levy reduction, it said, ultimately reflects a broader national question of whether Ghana will fully convert its mineral wealth into long-term industrial and economic transformation, or continue to lose potential revenue through policy inconsistencies.