General News of 2014-01-20

Gov’t is shooting itself in the foot with new VAT – Toma Amihere

The Editor of the Business Finder, Toma Amihere has opined that government is “shooting itself in the foot” with the introduction of the new Value Added Tax (VAT) rate.
He was of the opinion that government’s quest to rake in revenue through the tax rates is flawed because “companies can’t make profit.”
The new VAT rate of 17.5% has taken effect following the presidential assent given to the VAT Act 2013 (Act 870) on December 30, 2013, and its subsequent gazetting the following day.
Since its introduction, sections of the general public, some politicians and social commentators have lamented over the new rates stating that Ghanaian businesses will suffer and possibly grind to a halt.
Sharing his thoughts on the matter on Citi FM’s The Big Issue, Mr. Amihere explained that “if you increase corporate tax from let’s say 20% to 40% and the companies profit falls from 50 million to 5 million, do the maths; government is making less money not more money.”
He also noted that the increased taxes is currently affecting consumer demand which will result in “less economic activity, and less taxes on international trade.”
According to him, government’s pursuit to balance its books “is actually shooting itself in the foot and we will keep failing to balance those books because if you increase the tax rate, be expecting to get less tax revenue.”
But financial analyst, Sydney Casely-Hayford supported the tax increases because according to him, Ghana as a country does not generate enough revenue to “be able to evolve our programmes.”
He maintained that the country needs the tax increments “to be able to make things work properly.”
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