Business News of 2014-08-01

Raising tax rates not gov’t priority – Nii Moi Thompson

An economic advisor to the President, Dr. Nii Moi Thompson, has revealed the government is shifting its focus from raising tax rates to tax mobilization.

He said the new policy is aimed at making tax administration more efficient, adding that the shift in focus is due to the public outcry over recent increase in tax rates. The government was forced to direct the Ghana Revenue Authority (GRA) to withdraw the introduction of 17.5% Value Added Tax (VAT) charges on non-core financial services.

Government was heavily criticized for seeking to tax non-core banking services which many said was used by the small minority who are already paying various taxes in the country. Though government insisted that the new tax system was necessary to support the country’s ailing economy, it was withdrawn just days from the deadline for introduction.

On the Citi Breakfast Show, Dr. Thompson explained that it would have been suicidal for government not to pay heed to the concerns of Ghanaians. “You cannot close your eyes and ears to what people are saying. Ultimately, your policies are meant to benefit people so if they tell you that these policies are harming me, it’s up to you to sit down and listen,” he remarked.

According to him, some of the taxes had “already gone into place” but the government had to suspend the taxes. President Mahama’s economic advisor said it is unwise for governments to tax their way out of economic problems.

Citing the benefits of government’s “improved approach to taxation”, Dr. Thompson said this new system helped in the detection and arrest of the Director of Kessben Group of Companies, Kwabena Kesse, for alleged money laundering and forgery.

He indicated that security services will not only deal with the problem but the institutional lapses which led to the alleged money laundering will also be addressed.

Senchi Report

Dr. Thompson expressed disappointment at the behaviour of some participants of the National Economic Forum. According to him, some participants are embittered for not being included in the Implementation Advisory Group.

“There seems to be some bitterness about that among some of the participants and so they are going around trashing the report. It’s clear that they haven’t read the report and they say it is riddled with errors. There is no such thing,” he observed.

He clarified that mere participation at the Forum in Senchi does not mean an automatic inclusion in the Implementation Advisory Group. This follows remarks made by financial analyst, Sydney Casely-Hayford that the Senchi Report was riddled with errors, hurriedly put together and presented to the president due to growing demands from the general public.

He also questioned the readiness of the Mahama-government to implement the recommendations in the report to solve the nation’s economic difficulties.

Dr. Thompson pointed out that “a report of this nature will have one or two errors here and there but it is completely misleading to say that it is riddled with grammatical and so forth errors.”

In response, Mr. Casely-Hayford insisted that there are grammatical errors ‘and there are also major sentence constructions that actually don’t explain what is being said properly.” He promised to make the mistakes known to Dr. Thompson in due course.

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