By GhanaNewsPage 
Beginning July 1, 2025, the Ghana Revenue Authority (GRA), under the directive of President John Dramani Mahama, will implement a 15% Value Added Tax (VAT) on all non-life insurance premiums.
This new policy is expected to have wide-reaching consequences for both consumers and businesses as they prepare to navigate a more expensive insurance market amidst broader economic uncertainty.
Non-life insurance policies such as vehicle, property, travel, health top-ups, and business liability coverage will all be affected by this tax. Ghanaians who purchase these policies will now be required to pay an additional 15% on top of their existing premiums. This move has drawn immediate attention and sparked strong reactions from both the general public and economic analysts, especially as it appears to contradict the campaign assurances made by President Mahama.
What this 15% VAT impose on the current administration
Many citizens remember Mahama’s 2024 campaign promises clearly. The former president had positioned himself as a leader who would provide economic relief, reduce the cost of living, and protect ordinary Ghanaians from excessive taxation. However, this new policy seems to reflect a different reality, leaving many to question the sincerity and reliability of his leadership. The implementation of this tax is being interpreted by critics as a betrayal of trust, especially considering Mahama’s well-publicized commitment to maintaining or reducing tax burdens rather than increasing them.
The direct impact of the VAT on insurance premiums will be felt by millions of Ghanaians. Consumers are likely to face increased insurance costs, which will raise the overall cost of living. Many individuals who previously maintained basic vehicle or health insurance may now reconsider their options, potentially dropping coverage due to affordability concerns. For a country already struggling with low insurance penetration, this policy may discourage even more citizens from participating in the insurance sector.
Businesses, especially small and medium-sized enterprises, will also experience added pressure. Insurance is a fundamental operating requirement for many businesses, especially those involved in logistics, construction, manufacturing, and trade. With the VAT addition, business owners must adjust their budgets to accommodate rising operational expenses, which could lead to price hikes for products and services, cost-cutting on employee benefits, or reductions in insurance coverage altogether.
There are also broader macroeconomic concerns. Experts warn that this policy could contribute to inflation, as the ripple effect of higher business costs translates into elevated prices across various sectors. Additionally, insurance companies themselves may face a reduction in client numbers and premium revenues, increasing competition in an already challenged industry and potentially leading to job cuts or operational downsizing.
Social and political critics have been quick to respond, branding the decision as poorly timed and regressive. The labeling of John Mahama as “incompetent” by some vocal citizens and political opponents is now gaining traction, fueled by what they see as a government that speaks of empathy while implementing policies that burden the average Ghanaian. The tax on insurance premiums, though legally enforceable, has been interpreted by many as lacking the sensitivity needed in these economically trying times.
Despite the backlash, government representatives have yet to fully engage the public on the rationale behind the policy. Analysts suggest that the move is part of a broader attempt to increase domestic revenue without taking loans. However, they argue that without adequate stakeholder consultation and public education, the policy could lead to unintended consequences, including a sharp decline in insurance participation and weakened public trust.
In an economy where many citizens are already making tough decisions to survive, the addition of a 15% VAT on non-life insurance premiums could be the tipping point that drives people away from protective services they genuinely need. For the Mahama administration, this policy may pose long-term political risks if the current outcry is not addressed with empathy, strategy, and relief mechanisms for those hardest hit.
As the July 1 rollout approaches, all eyes will remain on how the government intends to manage the fallout, communicate its intentions, and offer tangible support to ensure that essential services like insurance remain accessible and affordable for the average Ghanaian.
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