General News of Thursday, 2 March 2017
A former Deputy Finance Minister has cautioned Ghanaians to brace up for difficult times because of challenges he envisages government’s decision to scrap some taxes might pose for the economy.
Casiel Ato Forson said the governing New Patriotic Party (NPP)’s decision will worsen the predicaments of Ghanaians rather than mitigate them.
Reacting to the tax cut component of the 2017 budget, the Member of Parliament (MP) for Ajumako Enyan Essiam said taxes are introduced not only because of revenue.
“Taxes are sometimes introduced for the purpose of shaping policy,” he noted. Finance Minister Ken Ofori-Atta has announced government’s decision to abolish about eight taxes and re-adjust four in 2017 to improve the climate of doing business in the country. They include;
(a) Abolish one percent special import levy,
(b) Abolish 17.5 VAT on financial sevices
(c) Abolish 17.5% VAT on selected imported medicines
(d) Initiate steps to remove import duties on raw materials and machinery
(e) Abolish 17.5 VAT on domestic airline tickets
(f) Abolish 5% VAT on real estates
(g) Abolish excise duty on petroleum
(h) Reduce special petroluem tax rate from 17.5% to 15%
(i) Abolish duties on importation of spare parts.
(j) Abolish levies imposed on Kayayei’s by local authorities (k) Replace the 17.5 VAT on Ghana Stock Exchange (GSE) traders to a flat rate of 3.5 percent
(l) Reduce National Electrification levy
Many of these taxes were introduced by the erstwhile National Democratic Congress government to fill in the shortfalls in revenue generation in the country.
“Some of these taxes have proven nuisance,” Mr Ofori-Atta said, adding the measures to eliminate and reduce some of them is in line with government’s commitment to ensure that the economy regains its strength.
But Mr Ato Forson who is also the Minority Spokesperson on Finance said government’s decision to abolish duties on spare parts might endanger the health of Ghanaians because it opens the floodgate for cheap products to be brought into the country.
“This policy is not consistent with the arrangement that old cars are going to attract higher taxes,” he said.
Nonetheless, he said the tax cut is deceptive because government only targeted special levy taxes which do not amount to more than GHC100 million.
“The so-called taxes they claimed they have removed is under GHC100 million.”
He said President Nana Addo Dankwa Akufo-Addo failed to review the corporate tax from 25 percent as he promised during the 2016 campaign.
“They were categorical that in their first budget they were going to review the corporate tax from 25 percent, but they did not do that,” he lamented, government has not achieved anything by failing to remove the “big taxes which amount to GHC568 million.”