Time to remove stabilisation levy companies urge govt

Businesses in the country have heightened their call for the withdrawal of the Fiscal Stabilisation Levy (FSL), which they say was having a toll on their businesses.

The Ghana Chamber of Mines, MTN Ghana and other businesses have all at different occasions called for the removal of the levy.

At a recent media and stakeholder engagement in Accra, Chief Executive Officer of MTN Ghana, Mr Ebenezer Asante, said the levy was having a toll on their businesses, considering the already austere operating environment.

“Abolishing the FSL, which is deducted before profit is declared, will go a long way to make the telecom industry robust to continue its positive contributions to the economy of Ghana”, he said.

The MTN CEO said although the levy was introduced with sunset clauses, it had continued and it was time it was abolished

Telcos profit

Already, many of the telecom companies in the country hardly make profit, with some recording losses and barely breaking even.

Out of the GH¢677 million tax contributions MTN Ghana paid last year, they included GH¢33.3 million in fiscal stabilisation levy, which selected industries in the country paid to the government.

Shore up revenues

The levy intended to shore up revenues to bridge this year’s budget deficit and raise funds for national development.

“This is supposed to be a temporary measure, but we do not understand why it is still being implemented, I think it has outlived its usefulness”, Mr Asante.

The law re-imposed a stabilisation levy of five per cent on profit before tax of selected companies and institutions for a period of 18 months to raise funds for fiscal stabilisation of the economy.

Government in 2009 introduced the National Fiscal Stabilisation Act, 2009 (Act 785) to garner resources for economic expansion.

Single spine

However, following the stability of the economy in 2011, the Act was repealed but due to the implementation of the Single Spine Salary Scheme, among others, threatening to crowd out investment in other sectors of the economy, the levy is being re-imposed to help generate revenue to meet those shortfalls.

 The Association of Ghana Industries (AGI) wants the levy to give special consideration to the manufacturing sector, which was critical to economic development, so that its cost of doing business was not increased to make the sector noncompetitive.

Executive Director of AGI, Seth Twum-Akwaboah, said “If the imports duties are on consumption goods, which sometimes serve as competitors to locally manufactured ones, then its okay. But if the duties are imposed that serve as raw materials for the manufacturing industry, then it can make the cost of doing business expensive for the sector”, he said.

“We have always argued that if the government broadens the tax net, it can raise more revenue that may not require such taxes,” he said, adding that although it was easier to plan with the formal sector, there could be a way out to track inflows from the informal sector as well.