Chief Executive Officer of the Ghana National Chamber of Commerce and Industries (GNCCI), Mark Badu-Aboagye, has expressed his disappointment in the approval of three new tax bills by parliament into law, insisting they are counterproductive.
According to him, the introduction of these taxes will have a grueling impact on the business community, and it is just unfortunate that the Chamber’s call and concerns against the passage of the bills have been ignored and subsequently passed. He revealed that businesses as it stands now are not making profit and are already suffering, and as such, “can’t tax ourselves out of what we are going through”.
“… We have said that these tax bills are counterproductive, anti-business and obnoxious in nature. They are nuisance taxes; they are not going to add anything to developing the private sector… If you look at for instance the Growth and Sustainability bill, they are going to tax profit before tax. Now, they can only tax you when you make the profit. Looking at the current condition, looking at the current high cost of production and doing business, how do they expect the businesses to make profit and then they will tax?”
Mark Badu-Aboagye
Mr Badu-Aboagye stated that what government needs to do is to ensure and empower the private sector so they can grow, hire people, make a lot of revenue and then it can consider taxing businesses. However, it noted that what the government is currently doing is “killing them right at birth” and this is not going to be in the interest of the country.
“We have been talking about changing the structure of the economy, we have been talking about reducing imports, we will not achieve this [because] how can you industrialize with all these taxes? How do you expect businesses to expand with all these taxes? We are going to continue to import and it’s high time we stop playing politics about the things affecting businesses.
“It’s high time we know the impact of these taxes on businesses and stop taxing them out of business, it won’t work. Businesses are going to collapse; already they are not competitive [and] the cost of doing business is high, comparing it to what is happening in other countries, and you come in with taxes every day, how do you expect businesses to survive and expand and employ people?”
Mark Badu-Aboagye
The GNCCI CEO highlighted that if government does not renege on its decision to impose unnecessary taxes on businesses, the impact will go beyond just affecting businesses to impeding government’s plans of generating need revenue.
Government at risk of not raking in projected revenue
Elaborating on why government may potential not be able to rake in needed revenue, Mr Badu-Aboagye revealed that the incidence of these taxes is on businesses and on consumers of the products of these businesses. This, he noted, will mean that when businesses are not able to make profit, government cannot tax them to generate requisite revenue.
“Now, all the bills they have passed, there are businesses who are supposed to pay the taxes and as I said earlier, you can only tax me when I’ve made profit. Apart from some of the mining companies that they are taxing production, all the other taxes are on profits…”
Mark Badu-Aboagye
Commenting on the increment of Bank of Ghana’s monetary policy rate to 29.5%, Mr Badu-Aboagye highlighted that this will necessarily translate into an increase in cost of lending, which feeds into cost of production of doing business in the country.
“So, if you take your revenue and deduct all these things, what is left is what you are calling the profit and you don’t have it because you’re making lossed so what are they going to tax? Secondly, the people who are buying the products, you have VAT on them, their purchasing power has been reduced drastically that they cannot buy the product for you to get the revenue that you want from VAT and other things. So, putting all these things together, the people you are taxing are saying they are suffering and what you want to tax is not available. So, how are you going to get the revenue?”
Mark Badu-Aboagye
Furthermore, Mr Badu-Aboagye indicated that as the tax rate increases, people will find a way to avoid the payment of taxes, which according to him, it’s not criminal. He emphasized that tax avoidance will increase and the revenue that government is expecting will remain a pipe dream.
“In the end, they will end up collapsing businesses. Businesses that are able to survive will either downsize or close down… Those that are not able to survive here will relocate to other countries and we are seeing some of them relocating…”
Mark Badu-Aboagye
