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Business News of Thursday, 5 February 2004

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Government Announces Major Tax Reliefs

Finance Minister Yaw Osafo Marfo says the NPP administration will not bow to the pressures of an election year, which often compels governments to deviate from their rational economic policies.

Delivering government’s economic statement for this year, Mr. Osafo Marfo listed what he referred to as government’s economic successes adding that this year’s budget has set out policies that ultimately makes the year a business friendly one.

The two and fifty-six page document first elaborated extensively on the gains made in the last fiscal year. The areas included a GDP growth rate of 5.2 per cent with the Agric sector contributing 6.1 per cent Industrial and manufacturing sector 5.1 per cent and 4.7 per cent for services and commerce.

The 2004 budget captures key issues such as creating a friendlier environment to support business, and strengthening and streamlining existing revenue mobilization strategies to maintain robust revenue strategies, and a reduction of import duties.

Perhaps what really will catch the attention of businessmen and the entire private sector is the list of items targeted to enjoy import duty reductions and VAT exemptions.

They include reduction in corporate income tax from 32.5 per cent to 30 per cent effective the next financial year. Special tax rate of 25 per cent for companies listed on the Ghana Stock Exchange for the firs time, 5 year holiday relief for agro-processing firms, 7-year tax holiday for waste processing enterprises and reduction in vehicle income tax from 1.2 million cedis to 900,000 cedis. It also includes a zero tax rate for firms in the three northern regions involved in agro-processing business.

Mr. Osafo also announced that government’s plans for the financial sector include the introduction of the foreign exchange, credit union and insurance bills as well as a Bills and cheque Bill to deepen the growth of the sector. He also indicated government’s resolve to achieve a single digit inflation rate.

Generally government policy for the year centres round the five priority areas identified by President Kufuor as the focus of his administration. The sectors include modernized agriculture, enhanced social services, good governance support for the private sector and infrastructure development.

Already the Minority group in parliament led by Spokesman on economic affairs and NDC MP Moses Asaga has labelled the budget a campaign budget aimed at winning the NPP votes in the upcoming general elections.