Contrary to the anxiety of the private sector, business community and a section of the public that government would introduce new taxes in the 2024 budget and economic policy to shore up its revenue, the Minister of Finance, Ken Ofori-Atta, yesterday announced eight tax reliefs to spur the growth of private sector businesses.
The bouquet of tax reliefs are zero rate of Value Added Tax (VAT) on locally manufactured African prints for two more years, waive of import duties on import of electric vehicles for public transportation for a period of eight years, waive of import duties on semi-knocked down and completely knocked down electric vehicles imported by registered electric vehicle assembly companies in Ghana for a period of eight years.
The others are zero rate of VAT on locally assembled vehicles for two more years, zero rate VAT on locally produced sanitary pads, import duty waivers for raw materials for the local manufacture of sanitary pads, exemptions on the importation of agricultural machinery equipment and inputs and medical consumables, raw materials for the pharmaceutical industry, a VAT flat rate of five per cent to replace the 15 per cent standard VAT rate on all commercial properties will be introduced to simplify administration.
Following the country’s signing on for the International Monetary Fund US$3 billion Extended Credit Facility in 2022, the government had introduced a number of taxes including the hiking of VAT rate to increase tax revenue collection to increase government revenue and to tame growing public debt.
Business associations such as the Ghana Union Traders Association (GUTA) has appealed to the government to scrap some taxes to bring relief to the business community and consumers.
Presenting the 2024 Budget statement and economic policy of government to Parliament in Accra yesterday, Mr Ofori-Atta said the focus of government since 2017 had been on production instead of taxation until the country experienced some global shocks in 2021 onwards which seriously impacted government revenue generation.
The budget was focused on two two-parts, an economic programme for next year and the budget.
Dubbed Nkunim budget, it was on theme “Pursuing growth and development within a stable macroeconomic environment.”
The presentation is in line with Article 179 (1) of the Constitution which mandates the President to “Cause to be prepared and laid before Parliament, at least one month before the end of the financial year estimates of the revenues and expenditure for the government of Ghana for the following financial year.”
It will be the final budget of the New Patriotic Party-led government and first since Ghana reached an agreement with the International
He said shocks such as the coronavirus in 2020 onwards seriously impacted government revenue generation and increased expenditure.
“Mr Speaker, our approach to tax policy since 2017 was to give significant relief to the private sector until expenditure pressures from 2020 required a more aggressive approach,” he stated.
He said in the short-term, fiscal sustainability required the need for government to improve its tax ratios significantly otherwise, the country’s long-term competitiveness would be eroded.
Mr Ofori-Atta said the country’s 13 per cent tax-to-Gross Domestic Product ratio was far below our peers, saying “Our target is 18-20 per cent and we are on course.”
“In that regard, it is difficult to implement all the structural reforms and tax reliefs needed to immediately lower and/or eliminate certain tax handles. However, I assure this August House, that we have heard, we believe in lower taxes for industry, and we are working at this aggressively with the GRA and to be cemented with the standing committee of the Mutual Prosperity Dialogue,” he stated.
The Finance Minister said a simplified tax return would be introduced as a means of promoting voluntary compliance as part of the modified taxation scheme for individuals in the informal sector.
That approach, he said, would make it easier for taxpayers to fulfil their tax obligations to the State.
BY KINGSLEY ASARE
