Executive chairman of the Food and Beverage Association of Ghana, John Awuni, has lamented what he described as the “over taxation” of businesses in the country which is not the answer to resuscitating the economy.
According to him, governments over the years have tried unsuccessfully to maintain stable macro-economic growth especially growth emanating from the private sector. However, he noted that no government has successfully engineered stable economic growth up to a decade.
Mr Awuni stated that successive governments blame each other for the woes of the country, and Ghana has visited the IMF for the 17th time in its history with each visit prescribing relatively hasher economic conditions with higher taxation for the citizenry.
He noted that if higher taxes were the key to the country’s economic development, Ghana would have been really developed with citizens enjoying lower cost of living among others.
Nonetheless, he explained that studies have shown that Ghana is among the top countries with higher cost of living, as prices change very often and in some cases by the day.
“Higher taxes is a major killer of businesses. Ghana has tried the option of higher taxes for decades and yet our economy keeps failing, it is time to try the option of tax net expansion, with lower taxes and scrapping unfriendly levies and duties, and business friendly taxes in the 2024 fiscal year.”John Awuni
Furthermore, Mr Awuni indicated that the Food and Beverage Association of Ghana is of the firm belief that the private sector which is the engine of growth can really sustainably perform well and spur the desired economic growth in the long run if the government of the day reduces the current level of high indirect taxes and levies, consumer and profit deductions which are non-tax-deductible.
He highlighted that several international studies have established that tax cuts have positive effects on growth, although some papers note that the strength of this effect depends on which taxes are cut, for whom and when.
Additionally, he emphasized that the current government, while in opposition, noted that no government can tax its citizens to prosperity, and that when given the power, it was going to move the country from taxation to production.
“It is in this light that we strongly advocate for major tax cuts and the cancellations of some taxes in the 2024 fiscal year. This will spur the gains the economy has started making to sustainable levels.
“The business sector is currently riddled with too many taxes, levies, duties and indeed an overtaxed economy, thereby stifling growth. The government stands to rake in more revenue for development if taxes are reduced and some cancelled.”John Awuni
Escalating prices of goods and services
Currently, Mr Awuni underscored that prices of goods and services are very high, consequently reducing the demand for goods and services.
He revealed that considering the level of low wages and salaries in the country, the government can trigger higher demand for goods and services in the private sector if taxes are reviewed downwards.
“Increased demand for goods will obviously lead to higher sales volume and higher production levels in industry and consequently more revenue for the government. The basic economic principle of the higher the price, the lower the demand cannot be ignored in the case of Ghana.
“At the moment, sales volumes and sales receipts among industry players are very low and we attribute it to the high prices of goods as a result of the numerous and high taxes and levies imposed.”John Awuni
Meanwhile, the executive chairman of the Food and Beverages Association is of the firm belief that the gains the economy is beginning to record could be sustained for long term growth and development if the private sector is relieved of some of the burdensome taxes either in the form of corporate tax, consumption taxes, or income tax.
He expressed that when businesses are overtaxed, they have nothing left to invest into research and development for business expansion.
Furthermore, he explained that when businesses fail to operate at their optimum level, they are also unable to enjoy the benefits of economies of mass scale production.
“China is doing much better due to the benefits of mass scale production their private sector is enjoying. Smuggling of goods such as rice, sugar and general fast moving consumer goods is becoming attractive due to the over taxation of the formal sector. Together, we can!!! Let’s say no to higher taxes and over taxation of the productive sectors of our economy.”John Awuni
READ ALSO: Partisanship Infiltrates Dam Spillage Crisis