The call to scrap COVID-19 Health Recovery Levy Act: Any justification?

The call to scrap COVID-19 Health Recovery Levy Act: Any justification?. The year, 2019 started just like any other year. However, before the end of its fourth quarter, a strange disease emerged killing many people in China, and started spreading to the United States and Europe in early 2020.

Background

It was later named COVID-19. The emergence of the COVID-19 pandemic compelled many governments to implement various measures to mitigate its impact on public health and the economy. In Ghana, one of such measures was the introduction of the COVID-19 Health Recovery Levy Act.

However, in recent times, there have been growing calls from especially members of the Ghana Union of Traders Association (GUTA) for the levy to be scrapped.

Dr Joseph Obeng, President of GUTA, in a few media engagements last year, reaffirmed this position saying the levy had increased the cost of doing business in the country.

He said the levy had become a nuisance tax given that COVID-19 was no longer a health emergency aand impressed on the government to use its 2024 Budget Statement and Economic Policy, which was presented to Parliament in November, last year, to announce the cancellation of the levy.

Also, Mr Anthony Oppong, Ashanti Regional Chairman of GUTA, in March, this year, reiterated the position of GUTA saying the levy was contributing to a decline in business in the country adding most importers had lost their capital.

Amidst the growing calls to scrap the levy, there is a compelling argument emerging that this is the time for the government to rename the levy for a Public Health Emergency Fund (PHEF).

It is argued that renaming the levy PHEF will shift its focus from recovery to preparedness and response. This will ensure dedicated support for its continued collection.

The COVID-19 Health Recovery Levy Act, 2021 (ACT 1068), and its potential Ghana recorded her first two cases of the COVID-19 pandemic on March 12, 2020. Besides its negative impact on the country’s socio-economic development, statistics by the Ghana Health Service shows that more than 1,400 deaths were also recorded.

A year into Ghana’s fight to contain the COVID-19 pandemic, Ghana passed the COVID-19 Health Recovery Levy Act to impose a special levy on the supply of goods and services and imports to raise revenue to support COVID-19 expenditures and to provide for related matters.

At the time, the government had already committed a lot of funds derived from loans, and grants from donor partners including the World Bank to fighting the disease.

The passage of this law in 2021, was, therefore, seen as a move towards establishing a reliable source of funds to fight the pandemic.

However, the nature of this law implies that when the pandemic is over, the country will cease to collect this levy.

The implementation of the levy began in May 2021. The fiscal data released by the Ministry of Finance on April 22, 2022, showed that an amount of GH¢773.93 million was realised from the levy within the first eight months (May 2021 to December 2021) of its implementation.

This amount, which was spent to contain the spread of the virus and its effects on lives and the economy, represented a substantial portion of the budgetary allocation to the country’s health sector. This shows that the levy has the potential to rake in the resources needed for the intended purpose.

Why rename the levy as PHEF

On May 05, 2023, the World Health Organization declared an end to COVID-19 as a global public health emergency. Following this declaration, calls have been made for the government to scrap the levy.

The proponents of these calls argued that the government lacked the moral right and justification to continue to collect the levy since the reason for its introduction no longer existed.

These calls are legitimate to the extent that the levy was purposely to support the fight against the COVID-19 pandemic.

However, what if there is another outbreak given that diseases will continue to come? For instance, records by the Ministry of Health, and the Ghana Health Service (GHS) show that within the space of three years (2020 to 2023), Ghana recorded outbreaks of eight major diseases namely Yellow Fever, CSM, the COVID-19 pandemic, Polio, Monkeypox (Mpox), Marburg virus disease, Measles, and Lassa fever.

While the past three years (2020-2023) put a lot of strain on the country’s health system in terms of her ability to respond to public health emergencies, the subsequent years could even be worse because other major disease outbreaks could be recorded.

In all this, how is the country prepared to face such a situation? Given the potential of this levy, the country cannot afford to stop collecting it even as the COVID-19 pandemic is over or no longer a public health emergency.

This is why this levy needs to be renamed as PHEF to change its focus from recovery from COVID-19 to public health emergency preparedness and response especially when the country currently does not have a PHEF to ensure a reliable source of funds to attend to public health concerns.

By renaming it as PHEF, the calls to scrap it will cease and the PHEF will garner greater support from the public since it is for a worthy cause. Given its potential, this levy, now PHEF, could offer the country a reliable source of funds to undertake routine activities as part of her Integrated Disease Surveillance and Response (IDSR) Plan and for that matter Epidemic Preparedness and Response (EPR).

Professor Yidana Adadow, Dean, School of Public Health, University for Development Studies, in an interview with the Ghana News Agency in Tamale, expressed support for calls to rename the levy PHEF.

He said as a nation, “We find ourselves in a situation where all our development hinges on donor funds. So, if you are a beggar, you are just begging from hand to mouth. How can you take care of eventualities when they befall you? So, the government should rename the levy PHEF. Once you have a dedicated fund, with managers managing the fund, the state will be able to take care of any eventuality that is likely to hit it.”

He advised members of GUTA to add their voices to calls to rename the levy PHEF, which would be in the best interest of the nation and businesses as well.

Dr Hilarious Abiwu, Deputy Northern Regional Director of Health in-charge of Public Health, also supported calls for the setting up of PHEF saying this would strengthen the public health sector to effectively respond to disease outbreaks.

Challenges in Implementing EPR in Ghana

Over the past couple of years, funding for routine disease surveillance activities or ISDR has dwindled. Budgetary allocations to the health sector go into emoluments for health staff, and the construction of health facilities leaves significantly fewer resources available to undertake routine disease surveillance activities.

This implies that diseases that could be detected and managed on time will be left to degenerate into an epidemic level with their devastating consequences on the population.

In the year 2021, the total national health budget was $1.30 billion. This budget included payment of salaries and health research amongst others. Out of the figure, $803m was expected to be spent on health delivery, and $9 million on goods and services.

EPR fell under the goods and services budget. This was inadequate considering the volume of work expected under the EPR.

In subsequent years too, budgetary allocations to the health sector have been inadequate. As has been witnessed over the years, diseases will continue to come.

Therefore, the country needs to be prepared by strengthening her ISDR through ensuring funds to undertake public health emergency activities.

Just as efforts were made to create the Health Insurance Fund to ensure availability of funds to handle the clinical aspect of the country’s health care system, the country must also establish the PHEF by renaming and or converting the COVID-19 Health Recovery Levy to PHEF to ensure availability of resources to effectively support the public health aspect of the health care sector as well.

Other sources of funds such as some percentage of tax revenues from mining and telecoms sectors could be added to funds from the levy and leverage on the PHEF to access external support from the World Health Organization and the likes should it be necessary.

The way forward

The continued collection of this levy despite COVID-19 being no longer a public health emergency shows that it is important to the country’s economy.

However, there are moral and transparency concerns in terms of how the levy is expended since the purpose for its introduction does not exist anymore.

This is why it is time to rename the levy PHEF and repurpose it as a fund to generate resources to support the country’s public health sector to be ready to adequately respond to any public health emergencies to protect the population and the country’s economy.

By renaming it and repurposing it in this direction, the growing calls to scrap it will cease since the people now know the reason for charging or collecting it.

Source: GNA