Private sector operators call for simple tax structure

Accra, Nov. 22, GNA - Stakeholders in the private sector have said the multiplicity of taxes and their mode of enforcement are a major handicap to the growth of the manufacturing sector. They said a complete overhaul of the tax system was necessary to engender enhanced contribution of the manufacturing sector, especially the Small and Medium Enterprise sector to the economic development of the country.

Ghana currently has 35 different taxes compared to 24 in Botswana and seven in Mauritius.

Speaking at the 46th Annual General Meeting of the Association of Ghana Industries on Wednesday, Mr Tony Oteng-Gyasi, President of the Association, said apart from stifling growth, the large number of taxes made compliance difficult and served as an incentive to evasion. He said a simple tax structure could be fashioned to yield even more taxes than was presently collected.

According to him a continued reduction of the tax burden on production and manufacturing was required to achieve government long-term objective of accelerated and sustainable industrial development.

While welcoming the proposed five per cent import duty on raw material, Mr Oteng-Gyasi called on government to direct efforts to remove other levies such as GCNet levy and Inspection fee among others, on imported raw materials, which together added up to some two per cent. Mr Oteng-Gyasi stressed that industry would be happier if these import levies on raw material and equipment were removed and corporate tax increased by the same margin.

"This will be in line with the position of industry that pre-production taxes be removed (instead) of post-production ones. This policy would also be especially beneficial to SMEs who have to import equipment and who generally have cash flow constraints," he said. Mr Oteng-Gyasi said with success on the macro-economic front, AGI would now urge a bolder strategic intervention at the micro levels to impact directly on SMEs if the country were to realise the desired accelerated and sustained industrial growth to guarantee jobs and incomes and to reduce poverty.

He lauded the substantial investment of 470 million dollars proposed in the 2007 budget for electricity generation. Mr Oteng-Gyasi said manufacturing thrived on power adding that tax incentives without power availability would not achieve the desired result.

He announced that the Association with support from the German Development Cooperation had instituted a Business Climate Survey to study the perceptions of business operators on various indicators, analyse these and publish the results of the findings for the benefit of policy makers, development partners and other stakeholders. Mr Charles Cofie, Chief Executive of Unilever Ghana, said at a lecture on Tuesday that past amendment of tax laws to improve collection had rather constricted cash flow and made manufacturing uncompetitive. He said government taxes had contributed to contraction instead of generating growth.

Mr Alan Kyerematen, Minister of Trade and Industry, said the country needed to transform itself from being a producer of primary products to the production of value added goods. It is in this direction that government was working to support industry through various initiatives such as credit support, retooling and replacement of obsolete machinery among other initiatives, he said. The Sixth National Industrial Week and 46th Annual General Meeting were marked on the theme: "Industrial Growth and Challenges of Poverty Reduction."