Nana Addo to introduce tax reforms

The leader of the country’s largest opposition party, Nana Addo Dankwa Akufo Addo, the New Patriotic Party (NPP), has pledged to introduce a raft of tax reforms to lessen the burden on consumers and businesses should he win the November 7 polls. The former Foreign Affairs Minister under the NPP administration, 2001-2008, who is now the flagbearer of the opposition party, said the introduction of some tax measures by the ruling National Democratic Congress (NDC) has further compounded the plight of businesses. Nana Akufo Addo was speaking at a press conference held in response to the State of the Nation address presented by President John Dramani Mahama to Parliament last Thursday. According to the opposition leader, businesses under the administration of President Mahama face several challenges including the nagging power crisis as well as high cost of credit -- which is as a result of government borrowing on the domestic market.

He stated that while businesses are finding it difficult to operate under such trying circumstances, the worst government could do was to introduce more taxes to exacerbate the already high cost of doing businesses in the country. He told a packed room full of party functionaries and pressmen that his approach “will be different from the tax, borrow and spend approach of the Mahama administration.

My priority will be to reduce the cost of doing business to help small and medium-scale enterprises grow and make the Ghanaian economy become globally competitive.” “We will provide tax incentives for increasing productivity. We are opposed to National Democratic Congress measures that cripple businesses and cause unemployment. “My intention is to reduce the corporate tax rate, abolish VAT on Financial Services, and remove duties on the importation of raw materials and manufacturing equipment, amongst other fiscal incentives to stimulate growth of the private sector,” he said.

Government in 2014 introduced a 17.5 percent VAT on fee-based financial services in line with the revised VAT law, which expanded coverage of the tax to include financial transactions and a host of new, previously unaffected sectors. Financial transactions on which VAT are levied include debit and credit card usage, and banking services which are delivered or accessed via a mobile phone or the Internet. Reacting to concerns that the tax could derail the central bank’s strong efforts to promote a society in which less cash is used as compared to electronic payment tools, Head of the BoG’s Financial Stability Department Dr. Benjamin Amoah said: “While we admit it may not help in our pursuit of a cash-lite society, changes can only come from Parliament”.

 Introduction of the tax was greeted with public uproar, forcing its implementation to be shelved till sometime in January 2015, several months after Parliament gave its approval. As a way of boosting job-creation by the private sector, the opposition leader promised that he will introduce “an enhanced employment Tax Credit Scheme to provide incentives for companies employing fresh graduates”. According to the Finance Ministry, the country’s total tax revenue for this year is estimated at GH¢28,868.5 million, representing 18.2 percent of GDP. With the reforms proposed by the opposition leader, it is not immediately clear as to what impact these reforms will have on tax revenue should they be implemented