A Fellow, Institute of Chartered Accountants Ghana (ICAG), Mr. Kofi AFFLU, wrote a very poignant opinion piece in today’s edition of the B&FT and began by admitting that Ghana is one of the countries in the World that has very high tax rates, something that very few people would disagree with.
Afflu indicates that effective and efficient tax systems call for stakeholder engagement, to discuss and agree on various tax rates in various sectors of the economy.
The mere imposition of levies in addition to the known tax types to raise revenue for development can be counter-productive, especially where these have resulted in the collapse of many institutions because of inflationary hikes in the economy, and the high cost of doing business eventually seriously affecting the cost of living.
In Ghana, the imposition of harsh taxes and levies has resulted in the escalating prices of goods and services, which has brought unprecedented hardship to Ghanaians.
Now, government has introduced a new Bill to Parliament titled Growth and Sustainability Levy Bill 2022 to raise revenue for growth and fiscal sustainability of the economy.
Mr. Afflu argues that a Levy on profit before tax which levy is not a deductible expense is a disguised increase in tax rates, and worse in impact, as it is even not based on actual profit and production.
He says it started as the National Reconstruction Levy, then styled as National Fiscal Stabilization Levy, and now clothed as Growth and Sustainability Levy.
Afflu points out that the Growth and Sustainability Levy is a crude way of dragging in all registered entities into the existing National Fiscal Stabilization Levy, which hitherto was limited to selected Banks, excluding rural and community banks.
“This is rebranding. It is a cheap way of generating revenue”.
In the case of banks, they are already being charged the Financial Sector Recovery Levy of 5% of their Profit before tax. They are to pay additional 5% of Profit before tax as Growth and Sustainability Levy (if the law is passed).
“It is a fallacy to say that the Growth and Sustainability Levy seeks to repeal the National Fiscal Stabilization Levy. That cannot be true. When a tax law is Repealed, you do not lift about 80 to 90% of provisions of the old law and put it in the {‘new law’}”.
The chartered accountant even went to demonstrate that there are as many as 14 taxes and levies on imported raw materials! Are we killing businesses or building them up?
ica.
