Businesses have warned against the introduction of new taxes in the midyear budget review because it will be counterproductive and could destabilise the business community.
Rather, they are urging the Finance Minister Ken Ofori-Atta to review a number of policies they claim are having negative repercussions on local businesses, particularly those in the manufacturing sector.
Key among them include the 5% VAT rate introduced during the last midyear review, the reduction in benchmark values of certain products that can be produced domestically, as well as, clarity on how the environmental tax is being used to tackle the plastic menace in the country.
“The 2019 budget has been presented and implemented, so we do not expect major adjustment except that last year we were shocked with some few taxes.
“This year we are not expecting a major shift in the budget review,†Association of Ghana Industries’ (AGI) Chief Executive Officer, Seth Twum-Akwaboah said when asked about what industry is expecting ahead of the July 29 Midyear Budget Review.
He, however, said businesses have some concerns about the 2019 budget, “We have further noted these concerns to the ministry and our expectation is that some of them will be addressed in this year’s review.â€
“One of them is the benchmark values. A reduction in the benchmark values which we think is not good for manufacturers because it is not making us competitive and we expect something be done about it.
“Additionally, since last year, there has been the issue of 5% flat VAT which is affecting businesses because it is now being absorbed as tax instead of an input tax that you can claim.
“Then there is another aspect which is tax-on-tax which is about 18.5% and companies are complaining about it and we expect that it will be looked at. Others relate to plastics; what we call the environmental tax, which the producers of plastics are paying. We don’t see how it is being utilized to deal with the plastics menace and yet there is so much talk about banning plastics and all that; we want to see if there could be changes to it,†Mr Twum-Akwaboah noted.
Explaining further, he said the 5% flat VAT, for instance, should be reduced to a rate of 1% so that consumers will not have to bear any extra cost.
He added, “We strongly recommend that it should be looked at because when it is done it will make our products competitive. So, we want it reviewed downwards.â€
On the benchmark values, he said, “Our position has always been clear, we have never said that it should completely be erased because there are some products that we don’t have the capacity to produce at the moment.
“But products that have local capacity, we don’t see why they should reduce the benchmark values for the foreign one to be sold cheaply compared to ours, so that is what we are asking the government to look at.â€
He added that the business community would also love to hear and see more funds being made available to support local industries, especially as the African Continental Free Trade Agreement (AfCFTA) is coming into force.
This, he noted, should form part of a broader strategy to support local producers to become competitive in order to take advantage of the free Africa market.
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Credit : BF&T