Govt's 3 new revenue laws could collapse businesses - Chamber of Commerce
The Chief Executive Officer of the Ghana National Chamber of Commerce and Industry (GNCCI), Mark Badu-Aboagye, is of the view that the three new revenue laws introduced by the government could lead to the collapse of many Ghanaian businesses.
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For him, the growing taxes will not only make cost of production high but will make it difficult for businesses to operate and make profit.
“We may end up collapsing businesses. Businesses that will not be able to survive, will either downsize or they will close down,” he stated.
Parliament last Friday approved four financial bills presented by the government aimed at generating approximately 4 billion Ghana Cedis annually to boost domestic revenue mobilization.
They are the Excise Duty Amendment Bill 2022, the Growth and Sustainability Levy Bill 2022, the Ghana Revenue Authority Bill 2022, and the Income Tax Amendment Bill 2022.
The percentages for the various taxes have increased and it now covers more products.
The move by the government is essential as part of the moves in facilitating the Board Approval for the $3 billion International Monetary Fund (IMF) Programme staff-level agreement.
The measures are part of the government's efforts to meet the IMF's criteria to qualify for a bailout.
The Excise Duty (Amendment) Bill, which will impose a 20 per cent tax on cigarettes and e-smoking devices, as well as sweetened beverages, spirits and wines, is projected to rake in about GH¢400 million annually, while the Income Tax (Amendment) Bill will generate about GH¢1.2 billion.
The Growth and Sustainability (Amendment) Bill, which will replace the National Fiscal Stabilisation Levy that currently imposes a levy on companies operating in selected sectors, is also projected to raise about GH¢2.2 billion.
The National Fiscal Stabilisation Levy itself replaced the National Reconstruction Levy, 2001 (Act 597) and the National Reconstruction Levy (Amendment) Act, 2005 (Act 687), which imposed a 1.5 per cent non-deductible levy on profits before tax of all companies, except rural and community banks.
The House also approved the Ghana Revenue Authority Bill, 2022.
The three tax bills are vital to enhancing Ghana’s chances of securing a $3-billion bailout from the International Monetary Fund (IMF).
- Related:
- Parliament passes 3 revenue bills
- Parliament approves three new taxes; expected to rake in 3.96 billion cedis
- Introduction of new taxes will bring more burden on business - GUTA tell gov't
GNCCI's argument on how it will impact businesses
Reacting to the passage of the bills by Parliament in a radio interview with Accra-based Joy FM on Monday (April 3, 2023), Mr. Badu-Aboagye said the timing of the taxes was bad, considering the current economic situation.
He said due to the continuous introduction of taxes in Ghana by the government, some businesses were leaving Ghana for neighbouring countries where the economic environment was conducive for business.
Mr. Badu-Aboagye indicated that some companies have already relocated to other neighbouring countries due to the "hostile tax regime" in Ghana.
Also speaking on the issue on the same platform, the Communications Director of the Ghana Union of Trades Association (GUTA), Joseph Paddy blamed Parliament for passing the laws without factoring the economic situation in the country into account.
“Parliament has failed us; we thought they were working for us rather they were working for themselves,”he said.
He said government could easily get the targeted revenue it intended to raise from the three new taxes if it blocked all the leakages in the revenue collection system in the country.
For him, there was no need introducing new taxes at this time, saying “Let us look at those leakages from the system and close those leakages; we can realise the money rather than introducing new taxes.”
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