Economist, Dr Michael Ayamga Adongo, has revealed that the tricks inherent in the 2024 budget presentation of tax waivers by Finance minister, Ken Ofori-Atta sent financial analysts on a frenzy.
According to him, experts were trying to rationalize the tax reliefs and exemptions purported to have been introduced in the budget.
He indicated that all of them were trying to discuss the introduction of a new tax waiver which in reality, are old tax regimes that already existed and had no impact on the economy.
To this end, Dr Adongo reckoned that the finance minister was “very cunning in the way he handled the tax regime”.
He explained that the “gang of taxes” which includes e-levy, communication tax and also the COVID-19 levy, expected to be expunged, are still there.
“I outlined what I expected to see in the budget – that was something that was going to boost domestic production by way of significant reorientation of our taxes. You saw the minister attempt to do that, but as usual, typical Ken Ofori-Atta was at his tricks again. He eventually listed old taxes and introduced new ones and sent all the analysts and financial experts on a frenzy…”
Dr Michael Ayamga Adongo
Impact of tax waivers on businesses
Furthermore, Dr Adongo maintained that there were new taxes but no tax reliefs in the eight tax waivers put forth by government. Citing an example, he noted that the extension of existing VAT waiver, which has been listed as a new tax relief is already in existence.
“Do you count that as tax relief? You are looking at also to waive import duties on electric vehicles, and if you analyze the impact of taxes, you are looking at the tax relief, the pathway to the manufacturing or production sectors, all the way down to the table where the bread-and-butter issues are paramount.
“You look at the tax reliefs that the honorable minister mentioned, and you can see them actually being the crippling taxes that are crippling businesses and leading to a decline in our production and for that matter our export…”
Dr Michael Ayamga Adongo
Dr Adongo emphasized the need for government to waive crucial taxes which impacts directly on businesses and Ghanaains in general.
One of the taxes, he noted, which Ghanaians desire to see the back of is the e-levy which has been underperforming, crippling businesses and “taking us back in terms of the progress we have made in digital financial inclusion”.
“…We also mentioned the fact that utilities in particular were something that was crippling businesses and if you wanted to revamp local production, the cost of business was something we need to look at, we didn’t see anything on that. Also, issues of the cost of credit, that also didn’t feature. So, if you look at these three things going forward, yes, you see tax reliefs that are created in frenzy and we are all talking about them but in reality, they don’t actually bring in anything.”
Dr Michael Ayamga Adongo
Commenting on the tax waiver on imports of electric vehicles, Dr Adongo questioned its impact on the business of a spare parts dealer. He indicated that there is no need celebrating electric vehicle tax waivers as a key environmental step, because the environment is already being destroyed through mining and government hasn’t handled it yet.
“Maybe it’s the honorable minister and his friends who now want to drive Teslas and they are creating tax waivers for them. How many electric vehicles are we having in Ghana? What is going to be the business impact on that? You are just telling businesses that if you want to now do business, start importing electric vehicles or go to hell… You can look at all the taxes, there’s no clear pathway to helping small businesses…”
Dr Michael Ayamga Adongo
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