Some businesses have appealed to the government not to increase or introduce new taxes in its 2019 Budget Statement and Economic Policy which is due to be presented to Parliament Thursday.
They are rather expectant that the revenue and expenditure estimation tool for next year will announce measures that will broaden the tax base and plug loopholes to help boost revenue collection and stimulate growth in the private sector.
Speaking to the Daily Graphic in separate interviews ahead of the presentation of the 2019 Budget and Economic Policy Statement, representatives of the Association of Ghana Industries (AGI), the Ghana Union of Traders Association (GUTA) and the Ghana National Chamber of Commerce (GNCC) said their members were already overburdened with the current tax regime, such that any further increases or introduction of new ones would worsen their plights.
They mentioned the conversion of the Ghana Education Trust Fund (GETFund) and National Health Insurance (NHI) levies into straight taxes, import duties, corporate and the environmental taxes as some of the categories of taxes that were particularly high and should be reduced or realigned to help bring relief to businesses and encourage operators to be tax-compliant.
Beyond the taxes, the representatives said the budget should also help address the perennial cedi depreciation, high interest rates, lower energy prices and loosen up the procurement process such that small and medium-scale enterprises could collaborate to procure goods or execute contracts for the State.
The Chief Executive Officer (CEO) of the AGI, Mr Seth Twum-Akwaboah, said the AGI was convinced that the country had in place enough and adequate tax arrangements which when properly harnessed, would yield the needed revenues.
“We think that it is not also good for us to frequently change our tax laws. Emphasis should be put on how to get people to be tax-compliant but no new taxes should be introduced,” he said.
He added that the conversion of the GETFund and NHI levies from value added to straight taxes was inimical to manufacturers, hence the need to review.
He explained that the cascading effect in the new tax regime did not support manufacturing, adding that: “It is actually inconsistent with the government’s own agenda of pushing manufacturing in the country.”
“For that particular policy, companies that have different distribution chains suffer more because it is now a cost,” he said.
He said the government also needed to disclose how collections of the environmental tax had fared and how they had been applied for the purposes for which it was introduced.
Mr Twum-Akwaboah said the AGI also expected the government to further stabilise the cedi Firefighting approach For his part, the CEO of the GNCC, Mr Mark Bedu-Aboagye, said the chamber expected the 2019 budget to move the economy from taxation to production in line with the New Patriotic Party (NPP) government’s manifesto pledge.
“There should not be an introduction or increase in any taxes whatsoever because we are already overburdened with taxes at the moment.
“We are expecting that they come out with innovative ways of expanding the tax net to include individuals and those who are conducting business activities but not paying taxes. They should be brought under the tax net to also pay some,” he said.
According to him, although treasury bill, Bank of Ghana policy rate and inflation had declined considerably in recent months, interest rates on loans had remained high, indicating a disconnect in the economy.
That, he said, needed to be corrected “with a clear policy direction” that would make interest rates respond to the policy rate.
“There should also be a clear action on how to stabilise the cedi.
The firefighting approach of whenever there is depreciation then we look for money from the cocoa syndicated loan, it stabilises and we go back to sleep only for the situation to reoccur is not helpful.
“We want a comprehensive approach on how they want to deal with it,” he said.
The President of GUTA, Dr Joseph Obeng, said the trading community was convinced that the government had the means and wits to stabilise the depreciation of the cedi against its foreign counterparts.
In the short term, however, he said GUTA expected the government to peg the US dollar to a stated amount of cedi for the purposes of payment of duties.
That, he said, would help insulate the businesses from incurring capital losses as a result of the depreciation.
Dr Obeng also called for a review of the tax exemptions policy to reduce the abuse.
“We think that it is being abused. The number of containers that do not pay import duties as a result of this exemption regime is almost the same as those of us who pay and the situation does not ensure parity.
“So even if this policy is necessary at all, then we want the government to do everything possible to plug every loophole that can subject it to abuse,” he said.
Although its third budget after taking office in 2017, the government will be presenting the 2019 budget as the first that will not feature the conditions and demands of the International Monetary Fund (IMF).
Since 2015, the IMF has been helping the country stabilise the economy under a three-year extended credit facility programme.
The programme ends this December, with final reviews scheduled to take place in the first quarter of next year.
In a related development, spare parts dealers at the Abossey Okai Market Square say they expect the government to use the 2019 budget to reduce duty rates, writes Daniel Ofosu Dwamena.
According to the dealers who spoke to the Daily Graphic ahead of the budget presentation, persistent high duty rates at the ports had slowed down their business as they were unable to sell their products on time due to high prices.
Import duty on imported spare parts currently hovers around 51 per cent, the highest in the sub-region.
“Duty rates are taking both our capital and profits. For instance, if you import goods worth about US$100,000, you are expected to pay almost about US$51,000 as duty,” the Chairman of the Abossey Okai Spare Parts Dealers Association, Mr Joseph Paddy, said in an interview.
He indicated that most spare parts dealers had halted the importation of parts into the country.
Mr Paddy, therefore, said: “We expect the government to reduce duty rates for us, as well as put in policies that will stabilise the dollar against the cedi. These are our major expectations in the budget as a trading community.”
In furtherance, he explained that the depreciation of the cedi against the dollar had made it difficult for businesses and business men to make projections.