The Chairman of the National Democratic Congress NDC, Dr. Obed Yaw Asamoah has said that the high rate of unemployment in the country was a result of high taxes, which accounted for the collapse of businesses.
Dr. Asamoah cited the National Reconstruction levy on businesses, ten per cent levy on exported lumber, 150 per cent income tax increase on commercial vehicles and the introduction of companies withholding tax of seven per cent.
He cited all these as causing the closure of a lot of companies and the laying off of workers as some of the high taxes.
In order to ascertain the truth of the matter, an Accra radio station investigated the allegations. Sources at the Internal Revenue Services (IRS) revealed that:
1. National Reconstruction Levy
10% levy on exported lumber is collected by the Timber Industry and has nothing to do with Internal Revenue Service.
The Minister of Finance and Economic Planning has explained the rates and the reasons for the imposition of the levy.
National Reconstruction Levy collected by IRS under Act 597 and 619 is levied on the following:-
a. Financial Institutions - 10%
b. Insurance Companies - 7.5
c. Other Companies - 2.5%
The levies are imposed on profit before tax. Rural Banks and Non-Financial Banking Institutions are exempt. It is to operate for 5 years only from 2001 ? 2005. It is not to be a permanent tax.
2. Income Tax Increase On Commercial Vehicles
The tax on commercial vehicles was reduced by 40%. The proposals were initiated by the Ghana Road Transport Coordinating Council (GRTCC). For example taxis which were paying ?60,000 for a quarter now pay ?48,000.
3. 7.5% Withholding Tax
The Internal Revenue Service had been collecting withholding tax of 5% for a number of years until it was raised to 7.5% in 2001.
There is a provision in Section 84 of Act 2000 (Act 592) which grants exemptions from withholding tax provided a person has a good tax record.
