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Silence On Corporate Taxes Attracts Mixed Reactions
 
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10-Mar-2017  
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Ken Ofori Atta
 
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Some industry players have expressed divergent views about the failure of the 2017 budget statement to touch on corporate taxes, one of the major promises the New Patriotic Party (NPP) made in its 2016 manifesto.

While some believe it is too early to mount pressure on the government to fulfil all its manifesto promises, others think  that, at least, a commitment to do it in subsequent years would have been a better option, rather than the total silence on what would have helped cushion corporate institutions whose cost of operation is preventing them from ploughing back a sizeable amount of their profits for expansion and to employ more people.
 
The NPP, on page 19 of its 2016 Manifesto highlights, said it was going to reduce the corporate tax rate from 25 per cent to 20 per cent among other taxes aimed at providing ease for businesses to operate.

The 2017 budget, however, captured a list of 11 abolished taxes and four reviewed taxes with no mention of corporate taxes.

Sources within the Ministry of Finance explained to the Graphic Business that although the reduction of the corporate tax rate was earlier captured in the budget, it was removed at the instance of some industry players who argued that they needed incentives to boost production and not tax cuts.

"It was in the budget but was taken out when the minister met with the Association of Ghana Industries (AGI). They wanted the government to look at electricity, raw materials and other things that would help them generate profit."

The source continued that "as for corporate taxes, you pay depending on your profit. It is 25 per cent and if you get less profit, you pay less. We will do it next year or next two years."

Industry players express concern

The Managing Director of Adehyeman Savings and Loans, Mr Joe Emmim, expressed worry over the silence of the budget on the reduction of the corporate taxes.

“It is in their manifesto. Even if they can’t do anything about it now, they should talk about it. The budget should not only be about things you are doing this year. It is also about the way forward and probably you are going to implement it in 2018,” he said in an interview last Tuesday.

He explained that some people voted for the government in power as a result of the anticipated tax cuts, including corporate tax rates it was going to provide to businesses in the country, and for them to go silent on it entirely was not the best.

“Some people voted for them on some of these issues. Let us know where you are driving us to so that at least we know there is hope down the line, but not to talk about it, I don’t think it is good,” he added. 

Mr Emmim explained that the huge taxes and financial obligations through the levy of Value Added Tax (VAT) continued to affect the company’s cash flow and its intended projects.

“Basically we only grow based on cash flow that we can generate as a company. Our cash flow will determine whether we can open more branches and employ more people. So if we have to send a third of that to the government, that means we have reduced funds to do things that we could have done,” he said.

The industry, he explained, pays an additional five per cent as a stabilisation levy aside from the 25 per cent corporate tax rate.

 “We are looking at 30 per cent corporate tax rate and for the economy to grow, and for us the private sector to create jobs, some of these things must be looked at. Aside from this, we are also on the hook to pay VAT on some other things we buy. For instance we pay VAT on electricity and that is killing us,” he added.

Others who spoke on grounds of anonymity said the silence of the government was worrying and indicated that should the finance minister decide to present a mid-year review of the budget, mention must be made of corporate taxes.

They also condemned the continuous stay on the stabilisation levy on corporate institutions and said that levy was becoming gradually institutionalised.

“The government must be real if it wants the private sector to play its role as the true engine of growth,” one person said.

To him, the government needed to come out with more pragmatic measures to rake in the players in the informal sector who do not pay taxes to free “the easy targets” who are also suffocated with taxes labelled in different ways anytime the government is hard-pressed for cash.

PEF’s position

The Chief Executive Officer (CEO) of the Private Enterprise Federation (PEF),  Nana Osei Bonsu, said the government had demonstrated the goodwill to reduce and abolish some of the ‘nuisance’ taxes as outlined in the party’s manifesto, hence there was no need to mount pressure on it for its failure to mention corporate tax.

“They have demonstrated the goodwill to remove some of the taxes
 
 
 
Source: Graphic.com.gh
 
 

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