Adobea Asiama-Aboagye, a representative for the Association of Ghana Industries, has called on government to reconsider the imposition of taxes. This, she noted will help sustain businesses in the country.
According to her, the newly proposed taxes in the 2021 Budget Statement is predisposed to impeding the progress made by these businesses. She fears these taxes introduced will have a huge toll on the business community.
Additionally, she stated the taxes come at a time when businesses are reeling from the devastating effects of the COVID-19 pandemic.
“Around this time, businesses need to be cushioned to revamp and recover from the pandemic. The banking sector levy of five percent on pre-tax on profit. We don’t expect the banks to absorb this. The likelihood of it being transferred to industries, businesses and individuals is very much on the high side. So, we think that should be looked at again”.
Madam Asiama-Aboagye was also of the view that, existing economic conditions will only worsen the difficulties on production. Also, she explained that it will affect the manufacturing value chains businesses and to a larger extent livelihood.
With this, she advocated for the review of the taxes. Which when left unreviewed will even make businesses unable to take advantage of the AfCFTA.
“Aside from that, as businesses when it comes to VAT and NHIL, there is a big problem. If you look at this, increasing these two levies is significant for businesses. If we are having taxes coming up in this format then how are we positioning ourselves to take advantage of AfCFTA? These are some of the challenges. because if it comes to manufacturing, the cascading effects of taxes in the distribution chain is a major problem”.
Government’s tax imposition
The caretaker Minister for Finance, Osei Kyei-Mensah-Bonsu in delivering the 2021 budget announced government’s proposal of introducing six new taxes.
These taxes include a COVID-19 Health Levy; 1% increase in National Health Insurance Levy and 1% increase in flat VAT rate as well as 30 pesewas increase in fuel prices to take care of excess power capacity charges [20 pesewas] and Sanitation and Pollution Levy [10%].
The Finance Minister-designate, Ken Ofori-Atta, however, justified the proposed new taxes in the 2021 budget.
He indicated that the country’s financial sector also has attacks. And that the associations somehow have an impact on revenue collection.
“There has to be a collective responsibility on that. We have seen the robustness of the sector over the past three or four years. And therefore I’m roping them in on their part as a shared burden philosophy in terms of the way forward”.
Proposed taxes must have timelines
Meanwhile, International Auditing Firm, KPMG has revealed that the yet to approved new taxes are a necessary evil as the government strives to engineer the recovery of the economy following the impact of the COVID-19 pandemic.
Senior Partner at KPMG, Anthony Sarpong, indicated that these taxes would require specific time periods, so they could be scrapped once the economy bounced back.
“I believe that the other way is to ensure that, it is for a set period, so it doesn’t become a permanent feature on the expense line of banks. If we do that, there will be a short-term measure to help all of us. For banks, we call them public interest entities.
“They are there to serve all of us. If they collapse, we will all suffer and if they survive it’s all for our benefit. So, if you are in a recovery mode, and they can support the government with revenue for all of us to survive, it is a good move, but it should be short-term in nature, so it can go away.”
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