Over-taxing could fade business confidence – GSA boss

There is a perceived feeling of excessive taxation in the business environment which could weaken the confidence of businesses in key sectors of the economy -- most significantly the sea trade sector --Chief Executive Officer of the Ghana Shippers’ Authority (GSA) Dr. Kofi Mbiah has warned.

“Coming into 2016, per what we are gathering, there could be a weakening of business confidence as people are beginning to feel taxation creeping into every aspect of their business life.

“The withholding tax of 7.5percent, for instance, will be very problematic for the sea trade business sector and other critical economic areas.

“Already, on the shipping front importers and exporters are charged on the Special Import Levy that was instituted by government in July 2013 -- even though it was meant to be applied for only two years,” he said in an interview.

Businesses in the maritime sector -- the country’s dominant economic sector -- are yet to gain their feet after years of erratic power supply and an unstable cedi.

Cargo throughput to the country’s seaports has dropped considerably over the last two years: from the 2013 expected cargo throughput of 20 million the figure dropped to 13.5 million in 2014, and then to 12 million in 2015.

The transit trade sub-sector was the only area that recorded an appreciation—around 600 metric tonnes to about 681,000 metric tonnes in the two years under review.

According to Dr. Mbiah, a key contributor to the phenomenon was the cedi’s volatility -- which he described as “highly dramatic and drastic within the short period” -- and the erratic power situation.

“The cedi’s fluctuation affected the confidence of business people; and people had to adjust to the situation in a way that they had not contemplated at all. It destabilised the process of import and export and worried us -- shippers -- greatly.”

But government early this year started implementing the new tax regime as part of efforts to boost revenue generation from the domestic market.

Components of the new taxation includes a one percent tax on investments; and the Energy Sector Levy on the back of already surging inflation and high interest rates.

But the shippers’ boss believes that government should consider broadening the tax base instead of piling taxes on businesses.

“We should hasten slowly with certain things; once the business person gets an impression that s/he is being overtaxed, there is that tendency for tax avoidance -- and that will constrict the amount of taxation flowing into the national coffers.”