Govt bags GH¢410m from stabilisation levy in 2 years
The government collected a total of GH¢410 million from the National Fiscal Stabilisation Levy for the past two years alone to help it stabilise the economy.
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Reintroduced in 2013 after its abolition in 2012, the NFSL generated GH¢64.58 million, with the 2014 collections yielding GH¢193.49 million against a target of GH¢251.45 million. The 2015 receipts amounted to GH¢217.28 million against a target of GH¢246 million.
“Surely, this revenue also means increased expenditure and lost capital by businesses which they could have re-invested in their businesses or distributed to their shareholders,” Tax Partner at accounting and advisory firm, KPMG, Mr Kofi Frempong-Kore, said at business forum in Accra in a presentation on “The Current Ghanaian Economy and the National Fiscal Stabilisation Levy Act, 2013: A Good Policy at the Right Time?
Business Forum on the "National Fiscal Stabilisation Levy and the Stamp Tax Policy’ was organised by the Ghanaian-German Economic Association (GGEA) as a follow-up on an earlier one in January aimed at examining the general tax policy environment in the country.
This because the private sector and individual workers have complained the cocktail of taxes was hurting incomes and stifling the business environment.
Mr Frempong-Kore said the objective of the National Fiscal Stabilisation Levy Act, 2013 (Act 862) was among other things earlier indicated was to curtail the growing levels of the national debt stock and stabilise the economy.
Then, since the implementation of the Single Spine Salary Scheme among others was threatening to crowd out investment in other sectors of the economy, the levy was imposed to help generate revenue to meet those shortfalls and transfer resources to other sectors of the economy.
NFSL good?
However, he said, there was the need for a whole day discussion on whether indeed the national debt stock had been curtailed or not.
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“We should also be asking ourselves, what would have been the levels of the current national debt stock without these interventions,” he said quizzically?
We cannot also overlook the expanded infrastructure projects and stability in the economic growth albeit at a reducing rate.
To the specific question of whether the policy had been a good one, Mr Frempong-Kore whose consulting work cuts across the public and private sectors, said it depended on the sector in question, saying “we could all ponder over that.”
Judging from the performance of the levy which was high with stable economic fundamentals and low with jitters in the environment, the tax expert inferred that, “improved economic fundamentals is best for the private sector to thrive and then sustain government’s fiscal measures.”
Tax Policy Advisor
Tax Policy Advisor at the Ministry of Finance, Dr Edward Larbi-Siaw, while the government did not want to overburden its taxpayers with higher tax rates, two options remained for the government to increase tax revenue; to broaden the tax net or introduce measures to prevent revenue leakages.
The above reasons prompted the government to introduce the national fiscal stabilisation levy and excise tax stamps.
The government, he said, was losing billions in revenues to smuggling, counterfeit, while legitimate businesses were being undermined and consumers being exposed to poorly made and unregulated drugs.
Dr Larbi-Siaw encouraged Ghanaians to be law abiding, be tax compliant and give away unscrupulous people who evade the system. This will help rake in much and prevent any attempt to hike tax rates.
President of GGEA
The President of the GGEA, Mr Stephen Antwi, said while the government would be receiving higher revenues from hikes and more taxes recently introduced, it was a matter of time for the real impact to be felt. That would include losing some businesses to neighbouring countries.
“The worse is that because of the cost factors, in-land manufacturing is suffering, as people now find it easier to import and pay duties on even items that we could produce locally such as fruit juices. Eventually, these companies will locate in neighbouring countries and export here,” Mr Antwi stated.