To promote industrialisation and support job creation efforts by the private sector, especially in this period where the coronavirus pandemic has wiped many jobs away, government has granted tax exemptions to companies under its flagship programme One District One Factory (1D1F) as a way of incentivising them, Finance Minister Ken Ofori-Atta has said.
Delivering his Mid-Year Budget in parliament last week, Mr. Ofori-Atta said, so far, the programme has seen 74 factories operationalise with further 232 projects at various stages of implementation. It is some of these factories that have been given GH¢34 million worth of tax exemptions to help reduce their cost of operations. Besides this, the minister further stated that government has directly spent GH¢210 million.
This comes at a time the country’s struggle with revenue mobilisation has been worsened by the coronavirus pandemic as its impact has further led to further declines in revenues.
According to the minister, provisional fiscal data for the first half of the year show that revenue mobilisation fell short of target by 26 percent, resulting mainly from shortfalls in oil revenue, customs receipts and non-oil tax revenues. Total revenue and grants for January to June 2020 amounted to GH¢22 billion compared with a programmed target of GH¢29.7 billion.
Non-oil tax revenue, comprising taxes on Income and property, goods and services and international trade, amounted to GH¢16.7 billion or 4.3 percent of GDP, 16.2 percent below the programmed target of GH¢19.9 billion or 5.2 percent of GDP. Revenue from upstream oil and gas amounted to GH¢1.9 billion (0.5% of GDP), 55.4 percent lower than the programmed target of GH¢4.4 billion, mainly on account of lower volumes and significant drop in crude oil prices on the international market.
But despite this grim picture, the minister says the tax exemption for the 1D1F companies is necessary as it is coming at a time the country is in serious need of jobs as some of the few that were available have been lost to the coronavirus pandemic.
Even though official job losses figures are not yet known, anecdotal evidences show workers in the hospitality, tourism, and education sectors, among others, have either completely lost their jobs or have been disengaged for some time without pay until things get back to normal.
Other job creation measures
As was announced in the mid-year budget, another programme government has introduced to stimulate large industries to enhance job creation is the Ghana COVID-19 Alleviation and Revitalisation of Enterprises Support (Ghana CARES) Obatanpa Programme. This is a GH¢100 billion programme to be rolled out in two phases.
The first is the Stabilisation Phase which runs from July to the end of the year (2020). According to Mr. Ofori-Atta, it will ensure food security, protect businesses and worker incomes, strengthen the health system, attract private investments and support Ghanaian businesses.
Then, the second is the medium-term Revitalisation Phase which will accelerate the Ghana Beyond Aid transformation agenda. Government will take resolute measures to improve the business environment for the private sector.
Specific measures to be implemented include significant improvements in business regulations and their implementation, digitisation to improve quality and transparency of public service delivery, expanding access to finance for Ghanaian business, skills training, and energy sector reform.