Business News of Fri, 17 Feb 20174
2017 Budget must reduce cost of doing business - Government told
The first budget of the ruling New Patriotic Party (NPP) must come out with policies that will reduce the cost of doing business in Ghana and meet the needs of Ghanaians, economists and captains of industry have called.
An economist with the Institute for Fiscal Studies (IFS), Mr Leslie Dwight Mensah told this paper, the 2017 budget must be crafted to meet the needs of Ghanaians.
According to him, “if the budget says these programmes are going to be done to alleviate poverty, to grow the private sector, to create jobs under various sectors, the report to Parliament, post budget, should indicate that these have been achieved.”
The IFS economist appealed to government to reduce the level of rigidities in the budget, stressing “we should not have a budget that by default will push us to borrow and borrow and borrow.”
Industry has lamented profusely about the high cost of doing business in the country. There have been concerns also about the relocation of some businesses into neighbouring Ivory Coast where it is cheaper to produce and transport back to Ghana for sale.
Finance Minister, Ken Ofori Atta will on March 1 (barring any changes) present government’s first budget and economic policy to Parliament.
The budget is expected to among others give the true state of the Ghanaian economy and outline strategies to improve the lot of the private sector through the elimination and reduction of some taxes.
The Minister has indicated that the budget will introduce policies that will help rationalise public expenditure, strengthen contract management and realign statutory funds for priority projects.
Taxes such as the 17.5 percent Value Added Tax (VAT) on financial services, some import duties and withholding tax will be removed, the Finance Minister has said.
Analysts have described as unsustainable the current practice where expenditure on wages and salaries consumes an increasing share of government revenue, given that the size of public sector employment relative to the labour force is declining.
Businesses in the import and export trade have lately demanded a reduction in the new EXIM levy on imports, arguing that the development will increase the cost of operation and overburden final consumers.
Other businesses have also called for the plugging of tax loopholes to make way for the planned levy cuts.
“Government must close the valves; there are many revenue leakages; the GRA, customs division, for instance, must be strengthened to close all leakages,” says Founder of NDK Financial Services, MrOko-NikoiDzani.
President of the Association of Ghana Industries (AGI), Mr James AsareAdjei is on record to have welcomed government’s decision to reduce taxes and gone on to remind the new administration that the problem of multiplicity of taxes had frequently been highlighted in AGI’s quarterly Business Barometer survey report.
“If the President says he’s going to reduce taxes it’s a move that the private sector and for that matter, the AGI is looking forward to,” he said.
The AGI urged the President to remove import duties on raw materials so that productivity will be enhanced.
He further called for the withdrawal of the energy sector levy since, according to him, the imposition of the levy has burdened the productive sectors of the economy.
The International Monetary Fund (IMF) after its latest mission to Ghana expressed confidence in plans outlined by government to cut down and eliminate some taxes, noting it will restore fiscal discipline, promote debt sustainability and support private sector development.
The fund argued that such decisions should also help reduce the large fiscal slippages observed last year.
President Nana Akufo-Addo has recently been telling investors that Ghana is open for business and assuring them of creating a conducive environment which would ensure that businesses flourish to create prosperity for Ghanaians.
According to the President, the topmost priority of his government was to create jobs for the people of Ghana in order to return the country to the path of progress and prosperity.
He said the industrialisation of the economy, with the aim of moving the country away from being dependent on raw material exports to an economy of value-added activities and the revival agriculture, is his main focus.
“It is for this reason that the government was determined to partner investors and the private sector to set up strategic industries to help create jobs for the youth,” he said.
Strategic industries such as in the iron and steel industry would exploit Ghana’s iron ore deposits at OpponManso and Sheini near Tamale, and facilitate the manufacture of machine parts and equipment.
Additionally, government is in partnership with the private sector to establish an integrated aluminium industry which would exploit the country’s bauxite deposits at Kyebi and Nyinahin, and also establish petrochemical industries to exploit the oil and gas deposits from the Jubilee, TEN and Sankofa fields.
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