Chief Executive officer of the Ghana National Chamber of Commerce and Industry, Mark Badu-Aboagye, says the government in trying to resolve its revenue problems has created another problem which could have dire effects on the economy.
He said, the government’s new tax bills, i.e. the Income Tax Amendment Bill, the Excise Duty Amendment Bill and the Growth and Sustainability Amendment Bill, are inimical to businesses and their passage Friday evening has ushered in the imminent collapse of several businesses, among other things.
“These taxes for me, the tax is counterproductive, its inimical to businesses, it’s anti-businesses, and I don’t think that we should even be here discussing these taxes because in the end it’s going to kill businesses and businesses will have no option but to lay off people,” he said on JoyNews’ PM Express.
Government had explained that the tax bills are needed to help the government complete processes for the $3 billion IMF deal as well as improve the revenue situation of the country.
The Finance Ministry had also warned that there could be serious challenges with the country, which may send shocks to the economy if the bills are not passed.
However, reacting to the government’s explanation, Mr. Badu-Aboagye noted that it was insufficient to justify why the new taxes had to be imposed on businesses.
“In trying to resolve an issue or a problem, don’t create another one that will be even more difficult for you to solve. It’s as if everything is about the IMF loan. So they are not being sensitive to the plight of the businesses. If you want to tax me, find out whether I’m able to make the profit for you to tax, find out the current environment are they supporting businesses?
“If I’m making profit, I will not have that issue, if I have to give back to government because I know government will have to develop; I mean the roads, the schools and other things, but we are in an environment where the policy rate which is also the monetary principles supposed to support businesses, is also being inimical to the development of businesses,” he said.
“Policy rate is now 29.5. So if you want to borrow as business, you’ll be paying around 40 to 45%. Just at the beginning of the year, we’ve seen utility prices going up. Water went up that high, electricity also went up and then inflation is also going up. All these things they are not in isolation. They work to increase the cost of doing business so already businesses are suffering,” he added.
Most outrageous among the tax bills passed, according to Mark Badu-Aboagye, is the Growth and Sustainability Levy.
He said the government has done very little to incentivise growth hence it should not be imposing taxes on growth, rather it should be cutting its own expenditure.
“Where are you getting the growth from? Who is giving you the growth? It’s the private sector. So if I’m not doing well, how are you going to get that money from [me]? Then after that you go and pay your corporate tax. Why? Multiplicity of taxes.
“If you’re an economy and you want to develop, you don’t develop by imposing taxes on businesses you develop by making them productive, empowering them using tax as an incentive to develop the private sector.
In other countries, Taxes are being given as an incentive or being used as an incentive to businesses to develop. So we give you a tax exemption, looking at your contribution to GDP. Here, everything is just tax, and for me it’s an easy way of generating revenue,” he said.
Meanwhile, the CEO of GNCCI has urged the Ghana Revenue Authority to instead ramp up their tax compliance measures to bring more businesses into the tax net rather than increasing taxes to crush compliant tax-paying business.
“Let’s look at how we can increase tax revenue without increasing the tax rate introducing new taxes and evidence is there, if you increase your compliance level. If you make that so simple and so easy, and the rate is low, people will even walk to the Ghana Revenue Authority and say that I’m paying my taxes,” he said.
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