Budget Day: This is not the time for new taxes

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– TUC, Employers’ Association

… Calls for expeditious implementation of Ghana CARES for rapid economic recovery

The Ghana Employers’ Association (GEA) and the Trade Union Congress (TUC) have unanimously cautioned government against any move to introduce new taxes in the budget today.

In separate press releases on their budget expectations, the GEA stated that: “businesses do not expect the introduction of new taxes as experienced in the past fiscal years in the upcoming budget,” with the TUC adding that “this is not the time to tax private sector businesses.”

According to the two institutions, the impact of COVID-19 on the operations of businesses seem far from over. As a result, they are keenly waiting for the implementation of rapid economic recovery strategies as many businesses are in dire challenges that need government policy directions to fix.

The GEA statement, signed by the President, Dan Achampong, outlining its inputs for the upcoming budget said: “The outbreak of the COVID-19 pandemic in Ghana, since March 12, 2020, has created many uncertainties, financial challenges, and short falls in aggregate demand for businesses and employers in the country. The pandemic derailed the economy to a path of significant decline, which necessitated the revision of projected 2020 overall GDP Growth from 6.8 percent to 1.9 percent.

Consequently, many enterprises have limited their operations with more workers facing the prospect of unemployment. Given the rippling effects of the shrinkage of the economy in the 2020 fiscal year, there is the need for a comprehensive strategy that will consider the rapid recovery of the economy in the short to medium terms without neglecting the social fabric of the citizenry” the statements said.

Ghana CARES

The GEA added that, employers commend government’s resolve to support enterprises and the economy to recover through the GH¢100 billion Ghana COVID-19 Alleviation and Revitalization of Enterprises Support (Ghana CARES) programme.

But what is currently important is expediting action in the implementation of the programme in a highly targeted fashion to assure optimum value for money; putting in place the necessary administrative arrangements to enable the targeted businesses and relevant sectors access funds outlined in the programme timeously.

Dr. Yaw Baah

The TUC on its part pointed out that the 2021 Budget, being the first under the Ghana CARES programme, must lead the way on job creation and offer real and comprehensive support to domestic industry. “This can be done in a number of ways; first, domestic firms must be rescued from the destructive competition in the name of trade liberalisation.” This, the TUC, believe requires overhauling the nation’s trade policy regime and practices.

Secondly, the TUC said the current high-interest rate regime must be tackled through a reform of monetary policy and sounder regulation of financial markets. Thirdly, the purchasing power of the state must be harnessed to support promising firms through a ‘buy made in Ghana’ initiative in which the government becomes the biggest patron.

Finally, the TUC wants the bureaucracy, which is the interface between the public sector and the domestic private sector, needs a major overhaul. It laments that, despite persistent reforms, business registration and business operation are still fraught with challenges including unnecessary delays which breeds corruption.

Macroeconomic Stability

The GEA indicated that going forward in 2021 and beyond, macroeconomic stability would be very essential in driving the sustainability and recovery of businesses. The growth of the private sector significantly depends on the macroeconomic policies of government.

The association added that, sound macroeconomic management and economic stability do not only result in the growth and development of businesses but also the welfare and standard of living of the people.

Abolish the Special Import Levy (SIL)

The GEA has reiterated its stands for the Special Import Levy (SIL) Act, 2013 (Act 861) to be abolished. The SIL was introduced in 2013 to impose a 2 percent levy to raise funds to stabilize the economy up to 2015.  In the 2020 fiscal year the Act was amended, and the terminal period was reviewed to 2024. The SIL of 2 percent applies on the Cost, Insurance and Freight (CIF) value of all goods imported into Ghana other than petroleum and fertilizer, and machinery and equipment imports listed in the Harmonized System and Customs Tariff Schedules.

Employers have always held the view that the Act has duly served its purpose and should be abolished. The GEA said in these difficult times of the COVID-19 pandemic, it would like to reiterate that the SIL be abolished in the 2021 budget and beyond, to give employers the urgently needed respite in their current high cost of production so as to keep their businesses alive.

“This will no doubt, make Ghanaian employers and manufacturers/providers of essential goods and services who depend on critical imported raw materials competitive on both the local and international scenes.

Such a move will also help the employers to provide continuing and/new employment opportunities to our teeming unemployed youth, provide essential goods and services at affordable prices to the citizenry, help earn/conserve critical forex via import substitution and generally, aid in the rapid recovery of our economy in the wake of the COVID-19 pandemic and beyond.

It is important to indicate that this SIL, if abolished, albeit in a targeted fashion to sustain the real sector, will rake in revenue via increased PAYE, VAT, Corporate Tax, forex savings et al, which will more than compensate for any perceived revenue loss in doing away with the status quo,” the statement said.

Improve ICT infrastructure

The GEA noted that one of the best legacies COVID-19 could leave Ghana with is a significantly enhanced ICT infrastructure. This, they believe, will certainly accelerate the digitization of the economy. The association added that enhanced ICT infrastructure will also accelerate the formalization of the informal sector of the economy in addition to facilitating skills development in all aspects of the educational spectrum.

GEA would like to urge government to create the enabling environment for the telecommunication companies to continuously supply, strong, reliable and affordable internet services to enable businesses and the citizenry operate flexibly in their daily activities.

Pensions

On the pension front, the TUC noted that last year government committed itself to top-up lump-sum benefits for retirees who retired under Act 766 whose lump-sum benefits fell short of the lump sum under PNDC Law 247.  It is therefore expecting the budget to make provision for the payment of the lumpsum top-up this year. “Workers who are retiring in 2021 are facing the same challenge. They also deserve lump-sum top-up,” The TUC said.

Unification of pensions

The TUC wants the decision by government to exclude all security agencies from the pension unification programme to be reviewed because it will perpetuate the discrimination in pensions. “As we stated in our New Year Message, the TUC cannot support such policy because it undermines the entire pension reform initiative under Act 766. We call on government once again to convene a stakeholder consultative meeting to discuss this and other pertinent issues about pension” the TUC pointed.

Unemployment Insurance

The TUC said, last year, government promised to establish the National Unemployment Insurance Scheme (NUIS) and offer training and retraining programme as part of measures to address the impact of COVID-19 on jobs.

It maintains that an insurance scheme for the unemployed is yet another important social infrastructure for enhancing the resilience of the Ghanaian labour market. It believes the training and retraining components will enhance human capital development and radically improve productivity and performance throughout the economy.

The TUC says it expects the budget to make adequate provision for the establishment of the unemployment insurance scheme and the training and retraining of workers who have been severely impacted by COVID-19. The TUC has promised to offer every support to ensure the smooth take-off of the initiatives.

Housing

The TUC noted that: “In the past years all governments have implemented some housing initiatives. But the housing deficit is increasing. Public housing programmes need to be refocused to deliver housing in a manner consistent with income levels. We expect housing delivery to be one of the primary areas of focus for the proposed National Development Bank. Government must consider offering loans to workers to build houses at their preferred locations anywhere in the country. This will significantly reduce the cost of housing and the housing deficit.”

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