The Ashanti Business Owners Association (ABOA) has appealed to the government to suspend the implementation of the newly-introduced 3% Valued Added Tax (VAT). The association cried out to the government concerning the consequences the newly introduced tax would have on their businesses, rather ABOA asked that the government to stick to the old 17.5% tax.
According to the secretary of ABOA, Mark Osei Boakye at a press briefing in Kumasi, the 3% tax was misleading because it rather increased the VAT by more than 20%. Currently the Ghana Revenue Authority (GRA) collects the old 17.5% VAT at the ports and at the manufacturing stage and then goes ahead to charge the new 3%, making the overhead cost of transacting business very high. Previously, businessmen struck out the difference between their input and output and the difference was paid to the government as VAT.
He explained that the newly introduced tax was putting businesses at a disadvantage because if the chain of distribution was long, by the time the goods got to the final consumer, the prices would be unbearable. He added that major companies such as Uniliver, which was exempted from VAT, could decide to mount warehouses all over the country and deal directly with consumers thereby killing local businesses.
Mark Osei Boakye suggested that the government should increase the VAT rate at the ports and the manufacturing stages so that there will be no need adding additional tax at the distribution stage.
He expressed fear that companies might be compelled, under the unbearable circumstances, to lay off workers to reduce their overhead cost, which will consequently have a negative effect on the economy.
Source: Marian Abena Oteng/hbtvghana.com