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Business News of Tuesday, 11 February 2020

Source: www.ghanaweb.com

We abolished/reduced 15 taxes to ease burden on Ghanaians and businesses - Bawumia

One of the key electoral promises the NPP made prior to the 2016 elections was that it would scrap what it called "nuisance taxes" if elected into power, and Vice President Dr. Mahamudu Bawumia has revealed that the NPP government has fulfilled that promise by abolishing or reducing 15 separate taxes in its first three years in office.

Speaking at the Government's Town Hall meeting in Kumasi earlier today to account to the people of Ghana, Dr. Bawumia said despite challenges of revenue the government faced when it assumed office, government decided to abolish or reduced 15 taxes the NDC had imposed on Ghanaians, in order to provide reliefs to the people and businesses, and also to shift from over reliance on taxation to industrial growth.

"Notwithstanding the revenue challenges we inherited, we took the decision to reduce taxes in the economy. We undertood that the tax burden on individuals and businesses was high following the high tax increases under the NDC regime," Dr. Bawumia said.

" We were aware that this could worsen our revenue challenges in the short term but we were of the firm conviction that this would spur growth and increase tax revenues in the medium to long term."

"In fulfillment of our promise to move the economy from a focus on taxation to a focus on growth we have thus far reduced or abolished at least 15 separate taxes and levies."

" It was a brave decision. No such broad based reduction in taxes had been implemented by any government since independence."

The 15 "nuisance" taxes, which Dr. Bawumia revealed the government has either abolished or reduced are:
1. Abolished the 17.5% VAT/NHIL on real estates
2. Abolished the 17.5% VAT/NHIL on selected imported medicines, that are not produced locally

3. Abolished the 17.5% VAT/NHIL on financial services
4. Abolished import duty on the importation of spare parts.
5. Abolished 1% special import levy
6. Abolished 17.5% VAT on domestic airline tickets
7. Abolished Levies imposed on Kayayei by local authorities
8. Reduced import duty for all goods excluding vehicles 50% and vehicles by 30%
9. Abolished excise duty on petroleum
10. Provided full corporate tax deduction for private universities who plough back 100% of profits into the university
11. Reduced National Electrification Scheme Levy from 5% to 3%
12. Reduced Public Lighting Levy from 5% to 2%
13. Reduced special petroleum tax rate from 17.5% to 13% and introduced specific rates
14. Replaced the 17.5 VAT/NHIL rate with a flat rate of 3 % for traders
15. Granted Capital Gains Tax Exemption on stocks traded on the Ghana Stock Exchange or publicly held securities approved by the SEC

Remarkably, despite the abolishing or reduction of the above taxes, data presented by the Vice President showed government revenue has increased annually by 25% since 2017, and growth, as envisaged by the government before abolishing the taxes, has also increased since 2017.

"Despite these tax reductions, the data shows that revenue collection in nominal cedi terms has increased by 25% annually since 2017," said Dr. Bawumia.

"In terms of real growth, the average real growth before 2017 (2013 to 2016) was 7.2% while after 2017, it was 8.4%. It is also important to note that the average dollar equivalent of collections pre-2017 was $5.89 billion per annum while post 2017 it has been $7.57 billion per annum."