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Business News of Thursday, 7 October 2021

Source: thebftonline.com

Reduce corporate tax to stimulate economy – Joe Ghartey

Former Minister for Railways Development, Joe Ghartey Former Minister for Railways Development, Joe Ghartey

The former Minister for Railways Development, Joe Ghartey, is making a strong case for government to look at the reduction of corporate tax, as he believes this will be a means through which the economy can be stimulated.

According to him, for businesses during these times when corporations are having difficulties, support like this will go a long way to ignite their operations and help them pay more taxes to government eventually.

“Some have argued that at the same time government is currently urging all of us to be aligned to our civic responsibilities including the payment of tax, reducing the rate of corporate tax may also have the net effect of increasing our tax revenue. Some countries have done this successfully, and it is worth looking at,” he stated.

He said this at the official launch of the University of Professional Studies’ (UPSA) Enterprise and Innovation Centre, which seeks to create opportunity for youths through enterprise and innovation.

Mr. Ghartey noted that government can also provide incentives for the private sector in order to lead investment into a particular segment – adding that taxation and tariff reliefs can be used as tools for economic development. “This is already being done, and some sectors attract lower tax regimes than others. The rate of taxation also depends, in some cases, on location of the business or industry,” he said.

While suggesting a reduction of corporate tax, Mr. Ghartey also holds the view that more education is needed on the various tax incentives and benefits under which Ghanaians can operate in order for the private sector to take advantage of them.

Reconsideration of taxes

Early this year, the Association of Ghana Industries’ (AGI) representative on the Citi TV/UPSA’s post-budget analysis programme at the University of Professional Studies in Accra, Adobea Asiama-Aboagye, said it would be prudent if government were to reconsider the imposition of taxes to help in the sustainability of business operations.

Ms. Asiama-Aboagye was of the view that existing economic conditions amid the taxes will only aggravate difficulties in the production and manufacturing value chains of businesses – and to a larger extent, even livelihoods. She said this while pointing out that taxes, if not reviewed, will even make businesses unable to take advantage of the Africa Continental Free Trade Agreement (AfCFTA).

Earlier this year, the Executive Director of Revenue Generation Africa and a member of the Tax Justice Coalition, Geoffrey Ocansey, described as untimely government’s introduction of some six taxes and levies in the 2021 budget.

According to him, though there is need to raise enough revenue for the 2021 fiscal year, the introduction of these taxes will further worsen the people’s economic situation because of impacts from COVID-19, which many are still yet to recover from, he said.

Even in 2019, the Tax Justice Coalition-Ghana (TJC) – a civil society organisation – urged government to return the corporate tax rate to 35% as was the case in the 1990s.

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