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Ghana’s 2024 Budget: major stakeholders want tax reforms

Adnan Adams Mohammed

Major players within the Ghanaian economy are calling for several tax reforms to help keep the private sector active to contribute progressively to the economic expansion and job creation.

Among the players is the Ghana Union of Traders Association (GUTA), which is calling for the withdrawal of both the COVID-19 Levy and the Special Import Levy in the yet to be read 2024 budget.

Specifically, GUTA wants the removal of the 1% COVID-19 Levy, the 2% Special Import Levy, and addressing the complex nature of Value Added Tax (VAT). The COVID-19 Health Recovery Levy was introduced in 2021 as a standalone tax applied to the gross value of taxable goods and services provided under the Standard Rate and VAT Flat Rate Schemes.

“Reducing the cost of doing business would lead to increased productivity and better revenue collection for the government’, Dr Joseph Obeng, the President of GUTA justified their demand.

Also, the Food and Beverage Association of Ghana has out-cried that, the business sector is currently riddled with too many taxes, levies, duties and indeed an overtaxed economy, thereby stifling growth.

Members of the Association believe that the government stands to rake in more revenue for development if taxes are reduced and some are cancelled.

John Awuni, the executive chairman of the association at a press conference said “We strongly advocate for major tax cuts and the cancellation of some taxes in the 2024 fiscal year. This will spur the gains the economy has started making to sustainable levels”.

Currently, he said the “prices of goods and services are very high consequently reducing the demand for these goods and services. Considering the level of low wages and salaries in the country, the government can trigger higher demand for goods and services in the private sector if taxes are reviewed downwards.”

For its immense role it plays in the financial sector of the economy, the Ghana Co-operative Credit Unions Association wants the government to exempt them from paying taxes to protect the investments unions.

Board Chairman of GCUA, Dr Bernard Bingab, explains that all African countries exempt co-operatives from tax. However, in recent years the Ghana Revenue Authority has clamped down on credit unions asking some to pay as high as one million cedis.

“This is a group that is there to help the country. Monies that we take as credit unions get back to the pool, so, we have difficulty as to why other African countries have exempted co-operatives and yet the credit unions are being asked to pay tax”, Dr Bingab said during the 55th-anniversary of the Ghana Co-operative Credit Unions Association at Koforidua in the Eastern region, last week.

“One of my biggest appeals to our government is tax exemptions for co-operatives”.

Notably, another key player or contributors to the Ghanaian economy is the hospitality industry. This, the Ghana Hotels Association (GHA) has also bemoaned the recent hikes in utility tariffs, taxes, and levies, saying “they are incredibly crippling the hospitality industry.”

The industry already suffered tremendous losses from the COVID-19 pandemic, and instead of helping to rebound faster, the Government had slapped it with hefty taxes, particularly property rates, which had deepened its woes, the Association said.

According to players, one of their major headaches is the property rate regime currently being implemented by the Ghana Revenue Authority, which they describe as a “killer to the sector’s rebound.”

“How could a facility that pays a property rate of GH¢700 suddenly rise to GH¢20,000 or from GH¢1,800 to GH¢50,000? We are not against the increase and the collection by GRA, but we are against the astronomical increases killing our businesses,” Isaac Nkoom, the immediate past Central Regional Chairman of the GHA said in an interview reacting to the current state of the industry.

“We do not know how they arrived at those sharp increases and, as far as we remain stakeholders, we expected some consultations on operational modalities before implementation.”

“This must certainly change for our mutual gain. The entire arrangement appears we are being punished for owning businesses because the rates do not reflect the reality of our business.”

The challenges had also been exacerbated by 20 multiple and duplicate taxes and levies, which were “suffocating the growth of the sector.”

“These include the NHIL, VAT, GETfund, COVID-19 levy, GTA levy, EPA Levy, FDA levy, MMDAs levy, Fire Service levy, and one percent tourism levy.”

“Others are SSNIT for staff, data protection levy, property rates, suitability report levy, and GHAMRO levy, all of which contribute to the pricing mechanisms.”

Mr Nkoom expressed regret over the burden those taxes put on industry operators and said the GHA had no option but to honour all tax obligations, in addition to the cost of maintenance, utilities, and the payment of salaries.

He urged the Government to consider the reduction in VAT charges as the hotel business was gradually grinding to a halt due to very low patronage, because of the economic hardship.

Apparently, the Finance Ministry is scheduled to present the 2024 budget to Parliament in November.

In the lead-up to the presentation, Finance Minister Ken Ofori-Atta has engaged with various interest groups, including GUTA.

Minister Ofori-Atta acknowledged the concerns raised by these groups, particularly regarding the high tax rates in the country.

He assured that their concerns would be taken into consideration before the budget presentation.

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