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Business News of Friday, 7 April 2017

Source: Charles Andoh

Economist lauds government’s tax measures

An economist and investment banker, Mr Alhassan Yakubu-Tali, has lauded the government’s decision to cut down or eliminate some taxes to enhance the growth of businesses in the country.

According to him, the imposition of taxes on businesses was a way of stifling the growth of the private sector, noting that they were punitive to their operations.

Speaking to the Daily Graphic in an interview in Accra, Mr. Yakubu-Tali who is also the immediate-past Chairman of the Germany Chapter of the New Patriotic Party (NPP) said the move by the government would yield the needed results in the shortest possible time.

“As a country, we have been preaching financial inclusion and with a checked banking record in the past, it did not make any financial sense to have imposed high taxes on financial services for instance.

“Therefore, the removal of taxes on financial services will give room for many people to access banking services and enhance financial inclusion,” he said.
2017 Budget

Presenting the 2017 Budget Statement to Parliament, the Minister of Finance, Mr Ken Ofori-Atta, announced the government's decision to abolish about eight taxes and re-adjust four to improve the climate of doing business in the country.

They are: abolishing the one per cent special import levy, 17.5 per cent value added tax (VAT) on financial services and 17.5 per cent VAT on selected imported medicines.

Others are initiatives to remove import duties on raw materials and machinery; abolishing 17.5 VAT on domestic airline tickets, five per cent VAT on real estates; excise duty on petroleum; reduction of the special petroleum tax rate from 17.5 per cent to 15 per cent and the abolishing of duties on importation of spare parts.

Kayayei tax

Again in the 2017 budget, the government abolished levies imposed on head porters, otherwise referred to as Kayayei.

In the view of Mr Yakubu-Tali, levies collected from Kayayei by local authorities as taxes were disingenuous.

On the current housing deficit, he stated that the elimination of VAT on real estates would encourage the private sector to build more affordable houses for citizens.

Foreign investment

Mr Yakubu-Tali, who has wide experience in international banking, said the removal of taxes would encourage foreign investment.

He indicated that whenever foreigners want to invest in any country, they considered the tax policy and how it favoured investors, “hence the removal will pave way for a lot of them to come into the country.”

“The best way to attract the needed investment is not to overtax but to blend taxation with incentivisation.

“I would urge the government to go further and reduce or eliminate other unproductive taxes to help bolster local and international investor confidence in the economy,” he emphasised.

‘Government will succeed’

Mr Yakubu-Tali said he was optimistic that the government would succeed if it was able to implement many of the policies it promised Ghanaians in the lead up to the 2016 general election.

He said all that Ghanaians were looking for was a successful nation; therefore, everyone would be happy if the government succeeded.