The Association of Ghana Industries (AGI) is alarmed at the government’s newly proposed taxes as outlined in the 2021 Budget Statement and Economic Policy.
It fears these taxes introduced will have a huge toll on the business community particularly at a time when players are reeling from the devastating effects of the COVID-19 pandemic.
Speaking at Citi TV/UPSA’s post-budget analysis programme at the University of Professional Studies, Accra (UPSA) held on Thursday, the AGI’s representative on the panel, Adobea Asiama-Aboagye, said it will be prudent if government reconsiders the imposition of the taxes to help in the sustainability of business operations.
“Around this time, businesses need to be cushioned to revamp and recover from the pandemic. The banking sector levy of five percent on pre-tax on profit. We don’t expect the banks to absorb this. The likelihood of it being transferred to industries, businesses and individuals is very much on the high side. So we think that should be looked at again. So we think that should be looked at again,” she said.
The government, through the caretaker Minister for Finance, Osei Kyei-Mensah-Bonsu in delivering the 2021 budget last week announced the government’s proposal of introducing six new taxes.
These taxes include a COVID-19 Health Levy; 1% increase in National Health Insurance Levy and 1% increase in flat VAT rate as well as a 30 pesewas increase in fuel prices to take care of excess power capacity charges [20 pesewas] and Sanitation and Pollution Levy [10%].
But Madam Asiama-Aboagye was of the view that, existing economic conditions amidst the taxes will only aggravate the difficulties on the production and manufacturing value chains businesses and to a larger extent even livelihoods.
She strongly pointed out that the taxes, if not reviewed, will even make businesses unable to take advantage of the Africa Continental Free Trade Agreement (AfCFTA).
“Aside from that, as businesses when it comes to VAT and NHIL, there is a big problem. If you look at this, increasing these two levies is significant for businesses. If we are having taxes coming up in this format then how are we positioning ourselves to take advantage of AfCFTA? These are some of the challenges because if it comes to manufacturing, the cascading effects of taxes in the distribution chain is a major problem.”