Business News of Wednesday, 20 March 2013
Source: Graphic Business
Private sector players from various sectors have called on the government to be very innovative and bold in broadening the tax net in order to rake in enough revenue to support development projects.
The players who participated in a post-budget forum in Accra said for a long time the country had paid lip-service to widening the tax net, while low hanging areas such as property tax and attracting private capital into infrastructural development were left untapped.
The Country Senior Partners of PwC, the accounting firm which organised the forum, Mr Felix Addo, told the Daily Graphic on the sidelines of the forum that although the budget was not as bold as it should have, it still maintained the focus to implement programmes that would sustain the confidence in the economy.
“The government has indication that it will continue with major projects such as road construction which are already underway. But there are areas such as water delivery, power and utilities that have to be tackled,” Mr Addo said.
On revenue generation, the PwC country senior partner was happy about the implementation of the Ghana Integrated Financial Management System (GIFMS), which would help track government expenditure and avoid waste.
However, Mr Addo wanted the government to be clear on its tax policies as the private sector was not certain about the exact reviews the government wanted to implement, adding that the windfall tax which was introduced in the 2012 budget had been re-introduced in this year’s budget and that had left the mining industry confused.
Still on tax measures, the accountant advised the government and the revenue collecting agencies to boldly apply the revisions announced in the Value Added Tax (VAT), which raised the threshold from GH¢90,000 to GH¢120,000 presumptive.
The revision means that a lot of small and medium scale enterprises which hitherto did not pay taxes would pay a presumptive VAT of three per cent of their value additions.
“Our tax collection mechanism is not too effective so we need to device smarter ways to collect the taxes, once they are introduced,” Mr Addo stated, explaining that although the Ghana Revenue Authority consolidation was in the right direction, more needed to be done to make them effective.
The Minister of Finance, Mr Seth Terkper, who was at the forum, assured the private sector that it was not the intention of the government to open the fiscal deficit gap to 12 per cent of the value of total goods and services produced in the country otherwise known as Gross Domestic Programme (GDP).
“Incurring deficit is not a comfortable place to be, but they came about as a result of some bold decisions we took such as implementing the single spine pay policy. In this year’s budget we have instituted measures to tackle it,” Mr Terkper assured. He explained that some single spine arrears that should have spanned three years were paid in full last year, making it a one-time item which would not recur to inflate expenditures again.
The Managing Director of Tropical Cable and Conductor Ltd (TCCL), Mr Tony Oteng-Gyasi, the industrialist and economist, has called for the redesign of all the country’s subsidies to ensure that they get the right impact on the targeted grouping in the society.
He said pre-mix fuel subsidies, petroleum and the Ghana Youth Employment and Entrepreneurship Development Agency (GYEEDA) and so on, could all be deigned to check abuse, while encouraging productivity among people rather than making them relax and not put in much effort.
Mr Oteng-Gyasi said it would be more appropriate for the country to remove subsidies from pre-mix fuel used by fishermen and rather build cold stores to enable the fisher folk to preserve their catch and get value.
The private sector practitioner said it would be important for the country to take a cue from emerging economies such as Brazil, Russia, India and China, countries whose governments created an enabling environment by conducting research and feasibility studies into various sectors and viable projects which help the private sector to tap the advantages and business opportunities.
“The BRIC experience has shown us that it is not enough to attain macroeconomic stability as a form of creating an enabling environment; the government conducts sector analysis to throw out the opportunities so that the private sector can go there,” Mr Oteng-Gyasi stated.
He therefore called on the government to as a matter of urgency mobilise some brilliant young men and women to become sector analysts to constantly research to bring out viable opportunities in various sectors of the economy.