AGI calls for a cut in corporate tax

Accra, Nov. 22, GNA- The Association of Ghana Industries (AGI) has asked the government to reduce the corporate tax rate from the current level of 32.5 per cent to 25 per cent for companies in the manufacturing sector to stimulate industrial growth.

In proposals presented to the government for consideration in the 2004 budget, the AGI is also calling for a review of the Value Added Tax (VAT) on imported inputs for manufacturing establishments, especially the distortions of the tax on textbook and pharmaceutical industries.

In addition, the AGI is asking government to undertake a critical re-evaluation of the withholding tax to save companies from operational bottlenecks.

Mr Eric Benyarko, the first Vice President of the Association, told members of the Parliamentary Select committee on Trade, Industry and President's Special Initiative (PSI) and Finance that higher taxes are hurting and worsening the plight of companies and would lead to the prolong recovery of the industrial sector.

"We believe that lower taxes, lower rates of inflation, and lower interest rates are the best way to revive economic activity and promote growth. Higher taxes only worsen the situation and prolong recovery", he said.

He said the lowering in the corporate income tax rate in 2001 was wiped out by almost simultaneous increase in other taxes at the local and national levels.

The session with the Parliamentarians is part of the week long Industrial Week Celebrations of the Association on the theme: "The Implications of International Trade Negotiations for Ghana's Industrial Development."

Mr Benyarko said the higher withholding tax have harmful effects on companies profit margins and their ability to operate cost-effectively.

He said under the current system where tax credit certificates that purchasers are supposed to issue to suppliers are either delayed or not issued at all, suggests possible diversion of government money into private hands.

He suggested that companies with good tax payment records be exempted from the withholding tax or it be pegged at a higher rate to encourage suppliers of goods and services to register with the tax authorities.

On charging of VAT on inputs, the Association proposed that all active ingredients of locally produced pharmaceutical products, including diluents and packaging materials be made VAT exempt.

Mr Benyarko said the current exemption of VAT on finished imported printed matters while VAT is paid on inputs, placed the local textbooks manufacturers at a disadvantage, against their foreign counterparts whose finished products are imported into the country VAT-Free.

The Association also requested the higher import duties on other manufacturing inputs for goods whose imported versions attract only concessionary rates be abolished, or reduced to levels that could keep Ghanaian industries competitive.

Mrs Elizabeth Villars, President of the AGI said it was ironic that these complaints have become annual rituals that have seen no resolution whatsoever.

"Some of us are rather disappointed that these meetings have become rituals that yield no result. We only come sympathise with each other but nothing ever is done to improve the situation," Mrs Villars said.

Nana Asante-Frempong, Chairman Parliamentary Select Committee on Trade and Industry, said members would bring their thoughts to bear on the issues when they are brought to Parliament for discussion.