From July 1, 2025, Ghanaians will begin paying more for a range of goods and services as new tax and pricing measures take effect—spanning insurance, fuel, electricity, and locally manufactured plastic products.
These adjustments are part of the government’s revised 2025 fiscal strategy aimed at boosting public revenue and narrowing the fiscal deficit. While officials defend the measures as necessary to stabilise the economy, many citizens are raising concerns about the rising cost of living.
Key Changes in Effect
1. VAT on Non-Life Insurance Premiums
The Ghana Revenue Authority (GRA) has imposed a 15% Value-Added Tax (VAT) on all non-life insurance premiums. This affects policies covering health, travel, property, fire, and liability. Motor insurance is the only category exempt from the new tax.
As a result, both individuals and businesses will now face higher costs for insurance coverage—potentially discouraging uptake in a country where insurance penetration remains low.
2. Fuel Price Increases
The Chamber of Oil Marketing Companies (COMAC) has confirmed a 5% increase in diesel prices and a 2% increase in petrol prices. The adjustments are attributed to rising global oil prices, exchange rate volatility, and changes in the National Petroleum Authority’s (NPA) pricing framework.
The fuel price hikes are expected to trigger higher transport fares and increased food distribution costs, with ripple effects across the economy.
3. Electricity Tariff Adjustment
The Public Utilities Regulatory Commission (PURC) has approved a 2.45% increase in electricity tariffs, affecting both residential and commercial users. The hike comes amid widespread concern over growing utility bills, especially for lower- and middle-income households.
4. 7% Price Increase on Locally Manufactured Plastic Products
The government has introduced a 7% price increase on all locally produced plastic goods—including common household items such as buckets, bowls, and packaging materials. The Ministry of Trade and Industry says the measure is intended to support domestic manufacturers and enhance competitiveness, while also encouraging environmental sustainability through improved recycling initiatives.
Public Reactions
Public response to the new measures has been mixed. Some citizens acknowledge the need to stabilise government finances, particularly under Ghana’s current programme with the International Monetary Fund (IMF).
Others have questioned the government’s sincerity—especially following the recent repeal of certain levies such as the E-Levy, the Gambling Tax, and the Emissions Levy.
Some citizens also say they have not felt the impact of recent gains in the cedi’s value. Although trade groups like the Ghana Union of Traders Associations (GUTA) have pledged to encourage their members to reduce prices, many consumers say price relief is yet to materialise.
Government’s Justification
According to the Ministry of Finance, these fiscal measures are critical to reducing the budget deficit, improving debt sustainability, and boosting domestic revenue mobilisation. Officials argue that Ghana can no longer rely heavily on external borrowing, especially under the ongoing IMF programme.
The GRA maintains that the VAT on insurance premiums aligns with international best practice. However, some analysts caution that taxing essential services like health and property insurance could be counterproductive, especially in an economy still recovering from recent shocks.
On fuel pricing, the NPA explained that the increase is based on an automatic adjustment formula that reflects global oil market trends and exchange rate movements. The PURC, meanwhile, insists the electricity tariff increment is a cost-reflective adjustment needed to ensure the financial sustainability of power providers.
The Trade Ministry says the plastic price hike aims to strengthen domestic production and promote recycling, adding that it will ultimately reduce reliance on imported plastic goods.
Outlook and Acccountability
While many economists agree that revenue mobilisation is important, they have expressed concerns over the concentration and timing of the new measures.
Higher fuel prices are expected to push up transport fares and, by extension, food prices. Small and medium-sized enterprises (SMEs) may see tighter margins, potentially leading to staff cuts or price increases for consumers.
The increase in insurance costs may further suppress already low levels of insurance uptake. And while the electricity tariff hike is modest, it adds to the growing financial burden on households already grappling with inflation and stagnant wages.
In the short term, Ghanaians are likely to adjust, albeit with significant discomfort. The longer-term impact, however, depends on whether the government can effectively use the additional revenue to improve infrastructure, pay arrears, and deliver better public services.
Civil society organisations are urging the government to ensure transparency and accountability in the use of the new revenue.
Meanwhile, the Bank of Ghana will need to monitor the inflationary impact of the price hikes to ensure they do not derail its monetary policy targets for the year.
