The Chief Executive Officer (CEO) of Dalex Finance, Mr Kenneth Kwamina Thompson, has said the impact of about eight out of 12 tax incentives introduced in the 2017 Budget Statement and Government Economic Policy is negligible to the development of the private sector.
Describing the incentives as tax relief “masquerade,” he said the eight included the 17.5 per cent Value Added Tax (VAT) on financial services and domestic air tickets and that of imported medicines.
Others include the removal of levies imposed on kayayei, religious institutions, the five per cent VAT on real estate, as well as the reduction in the public lighting levy from five per cent to two per cent.
Mr Thompson said those were taxes that did not seriously impact on majority of people in the country as they were supposed to be under normal circumstances.
At a post-budget briefing organised by the Ghana National Chamber of Commerce (GNCC) in Accra yesterday, Mr Thompson said: “As a business community, we were looking forward to the government to cut taxes but what we found was that some of the tax incentives introduced have very marginal effects on the development of the private sector.”
Held on the theme: “Leveraging on Government’s Initiatives in the 2017 National Budget for Private Sector Growth,” the event brought together players in the private sector, economic experts and policy makers to discuss opportunities in the budget for the business community.
The astute banker, however, lauded the removal of the one per cent special import levy, duty on imported spare parts, reduction in the national electrification scheme levy from five per cent to three per cent and reduction of the special petroleum tax rate from 17.5 per cent to 15 per cent.
Curb cedi depreciation
He said until the government introduced measures to curb the depreciation of the local currency against the major foreign currencies, the private sector would always suffer exchange losses.
“Unless we develop measures to curb the depreciation of the cedi against the major foreign currencies, the taxes will not make any direct impact on the private sector,” he said.
Mr Thompson advised the government to invest in the productive sectors of the economy to enhance the value of the cedi.
“I am not exactly sure why we struggle with cedi depreciation. The cedi will always depreciate; it is the rate at which it depreciates. It is a supply and demand situation,” he said.
According to him, the volatility of the cedi would continue to linger on so long as the country continued to import more than it exports.
Step in the right direction
For his part, the President of the chamber, Nana Appiagyei Dankawoso I, said the Budget Statement and Economic Policy of the Government for 2017 would address most of the economic challenges affecting the private sector.
“We have about 21 taxes at the port, so the introduction of these incentives is a step in the right direction, but we are also interested in critical sectors the government wants the private sector’s involvement for mutual growth and development,” he said.
He expressed the view that although not all of the economic challenges would be addressed by the budget, the private sector was excited about the reduction in taxes which is expected to ease the high cost of doing, business in the country.
Nana Dankawoso said the private sector would also support the government towards making the business environment more conducive to the growth of the business community.
Moving forward, he said, the government must show commitment to ensuring macroeconomic stability, particularly on the exchange rate, to help businesses in the country to grow.
He explained that the chamber had particular interest in steps that would be taken to ensure access to credit for the private sector, as well as reliable power supply for the smooth operation of businesses.
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