The Ghana National Chamber of Commerce and Industry (GNCCI) has warned that businesses may flee the country as the Ghanaian business/market operating environment is facing a new challenge due to the government’s heavy tax burden.
The warning follows the recent passage of three controversial taxes into law by parliament, namely the Income Tax Amendment Bill, the Excise Duty Amendment Bill, and the Growth and Sustainability Amendment Bill – which are expected to generate GH¢4 billion annually.
However, the GNCCI CEO, Mark Badu-Aboagye in an interview expressed doubts about the government’s ability to generate this revenue and warns of downsizing and business closures.
The GNCCI’s warning highlights the growing concern among businesses over the heavy tax burden in Ghana, which is threatening their profitability and sustainability.
According to Mr. Badu-Aboagye, businesses will relocate to countries that offer a more conducive environment for their operations to thrive.
This, he said, is a worrying trend for Ghana, which is struggling to attract foreign investment and create jobs for its growing population.
“For me, these taxes are counterproductive, inimical to businesses, and I don’t think that we should even be here discussing these taxes because in the end it’s going to kill businesses and businesses will have no option but to lay off people.”
Mark Badu-Aboagye
The GNCCI CEO argued that the incidence of these taxes is on businesses and the consumers of their products, which will only add to their financial burden.
Creating Crisis Out of Hurdles
Government had explained that the tax bills are needed to help the government complete processes for the $3 billion IMF deal as well as improve the revenue situation of the country.
The Finance Ministry had also warned that there could be serious challenges with the country, which may send shocks to the economy if the bills are not passed.
“In trying to resolve an issue or a problem, don’t create another one that will be even more difficult for you to solve. It’s as if everything is about the IMF loan. So they are not being sensitive to the plight of the businesses. If you want to tax me, find out whether I’m able to make the profit for you to tax, find out how the current environment is supporting businesses.
“If I’m making profit, I will not have that issue, if I have to give back to government because I know government will have to develop; I mean the roads, the schools and other things, but we are in an environment where the policy rate which is also the monetary principles supposed to support businesses, is also being inimical to the development of businesses.”
Mr. Mark Badu-Aboagye
Most outrageous among the tax bills passed, according to Mark Badu-Aboagye, is the Growth and Sustainability Levy.
He said the government has done very little to incentivise growth hence it should not be imposing taxes on growth, rather it should be cutting its own expenditure.
“Where are you getting the growth from? Who is giving you the growth? It’s the private sector. So if I’m not doing well, how are you going to get that money from [me]? Then after that you go and pay your corporate tax. Why? Multiplicity of taxes.
“If you’re an economy and you want to develop, you don’t develop by imposing taxes on businesses, you develop by making them productive, empowering them using tax as an incentive to develop the private sector.”
Mark Badu-Aboagye
Not limited to that, he further bemoaned how the government tax businesses that are not making profits, which suggests that many businesses in Ghana are struggling to survive.
In other countries, as disclosed by Mr. Badu-Aboagye, taxes are being given as an incentive or being used as an incentive to businesses to develop.
The CEO of GNCCI thus urged the Ghana Revenue Authority to instead ramp up their tax compliance measures to bring more businesses into the tax net rather than increasing taxes to crush compliant tax-paying business.
“Let’s look at how we can increase tax revenue without increasing the tax rate, introducing new taxes and evidence is there, if you increase your compliance level. If you make that so simple and so easy, and the rate is low, people will even walk to the Ghana Revenue Authority and say that I’m paying my taxes.”
Mr. Mark Badu-Aboagye
