Private sector players have expressed worry over a 5 percent National Stabilization Levy Parliament approved on Friday which is aimed at taxing the profits of companies and institutions in some specified sectors and providing revenue for fiscal stabilization of the economy, among others. Most of the players interviewed yesterday, expressed shock and dissatisfaction at the development, saying Parliament has hurriedly approved the levy without consulting with the private sector.
“While the US Government, Germany, Britain, Japan and other developed countries have sought to negate the effects of the economic recession on their economies by providing relief packages for companies, the Government of Ghana, instead of taking a cue from developed countries, is seeking to tax companies in the name of national stabilization, not considering the implications on employment and product cost,” an anonymous captain of industry noted.
Now awaiting presidential assent, the proposed levy, if passed after Parliament reconvenes in October, would affect the profits of banks, insurance companies, breweries, mining companies, as well as those in the communications sector. Dr. Osei Boeh Ocansey, Director General of the Private Enterprises Foundation (PEF), said if the development should sail through successfully, corporate tax will increase to 30 percent from its current state of 25 percent. “From the private sector view, it is an additional tax that will worsen the plight of corporate entities, especially those of international origins.”
“We are talking with the Association of Bankers, Ghana Chamber of Mines, the Association of Insurers, among other private sector bodies, to know which line of action to be taken”. Some operators in the mining industry which this paper spoke to also explained that government never consulted them before taking this decision. One player noted that the additional levy will make things difficult for their operations. Already, some banks and mining companies have frozen employment and this new levy would worsen the situation as fresh graduates will not have any place within these establishments.
Dr. Kwabena Duffour, Minister of Finance & Economic Planning, explained that the tax is a direct tax chargeable after the declaration of companies’ net profit and should therefore not be passed onto consumers. During the New Patriotic Party administration, the government introduced the reconstruction Levy to mobilize more funds from the private sector but the tax was scrapped in 2006. The stabilization levy is expected to be paid quarterly, starting from the end of September 2009 to December 2010. The law has 10 clauses, one of which mandates the Internal Revenue Service to collect the levy.
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