High taxes have failed Ghana, stop it - FABAG to Govt
The Food and Beverage Association of Ghana (FABAG) have called on the government to make major cuts on taxes in the budget for the 2024 fiscal year if businesses are to grow.
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Speaking at a press conference held in Accra on Monday (October 23, 2023), the Executive Chairman, John Awuni, stated that in order for the private sector, which is the engine of growth, to spur the desired economic growth in the long run, the government must reduce the current level of high indirect taxes and levies, consumer and profit deductions which are non tax-deductable.
“Indeed, if higher taxes were the key to our economic development, Ghana would have been really developed with citizens enjoying lower cost of living among others. However, studies have shown that Ghana is among the top countries with higher cost of living. Prices change very often and in some cases by the day,” he said.
Therefore, Mr Awuni said the FABAG believed that the gains the economy was beginning to record could be sustained for long term development if the private sector was relieved of some of the burdensome taxes either in the form of corporate tax, consumption taxes, or income tax.
Lower taxes equals more revenue
The Executive Chairman of FABAG also argued that the government stands to rake in more revenue in the long term for development if taxes were reduced and some cancelled.
He explained that less taxes would translate into cheaper goads which would create an increased demand for goods.
That, John Awuni said, would will obviously lead to higher sales volume and higher production levels in industry and consequently more revenue for the government.
“The basic economic principle of the higher the price, the lower the demand cannot be ignored in the case of Ghana. At the moment, sales volumes and sales receipts among industry players are very low and we attribute it to the high prices of goods as a result of the numerous and high taxes and levies imposed,” he explained further.
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However, John Awuni, lamented that when businesses are overtaxed, they are unable to invest in to research and development for business expansion which denies them of benefits of economies of mass scale production.
John Awuni further stressed that several international studies had established that tax cuts had positive effects on growth, although some papers note that the strength of this effect depends on which taxes were cut, for whom and when.
“Indeed, the current government while in opposition noted that no government can tax its citizens to prosperity. And that when given the power, they were going to move the country from taxation to production. Nuisance taxes were going to be removed among others,” he added.
FABAG also believed that lower taxes would curb the smuggling of goods such as rice, sugar and general fast moving consumer goods was were becoming attractive due to the over taxation of the formal sector.
“Higher taxes is a major killer of businesses. Ghana has tried the option of higher taxes for decades and yet our economy keeps failing, it is time to try the option of tax net expansion, with lower taxes and scrapping unfriendly levies and duties, and business friendly taxes in the 2024 fiscal year,” Mr Awuni stressed.
See statement below: