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Editorial: Consider corporate tax reduction to aid recovery

The government is being urged to look at a reduction in corporate tax in order to assist in the economic recovery since businesses and corporations are facing difficulties from the negative economic impact of the COVID pandemic.

Speaking at the official launch of the University of Professional Studies (UPSA) Enterprise and Innovation Centre that seeks to create opportunities for youths, a former Minister for Railways Development, Joe Ghartey led the charge.

Mr Ghartey expressed the view that government can also provide incentives to the private sector in order to lead investment to a particular sector adding that taxation and tariff reliefs can be used as a tool for economic development.

While suggesting a reduction in 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.

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

Additionally, 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 will be prudent if government reconsiders the imposition of the taxes to help in the sustainability of business operations.

This only goes to reinforce the difficulty the recovery process is for most businesses that were negatively impacted as a result of low economic activity during the onset of the pandemic, hence the call for some form of tax holiday to accelerate the recovery process.

The tax increases introduced in the 2021 budget statement were generally aimed at boosting government revenue, however, a detailed analysis of its implication shows that rather, they will increase the cost of doing business, reduce private sector investment, decrease economic activity, and an increased incentive for tax avoidance.

This point was also touched on by Mr Ocansey when he stated that though there is the need to raise enough revenue for the 2021 fiscal year, the introduction of these taxes will further worsen the economic situation of the populace because of the impact of COVID-19 which many are still yet to recover from.

Streamlining freight charges welcome

In line with reducing the cost of doing business, the Deputy Minister of Transport, Frederick Obeng Adom has said the government is earnestly working on streamlining port charges to help reduce shipping and logistics cost in the country.

Speaking at the 4th edition of the Ghana Shippers’ Awards, the Deputy Minister noted that the move is critical as it is an avenue the nation can maximise revenue if collection procedures and the cost attached to services are made more flexible.

In line with the above, a team of stakeholders comprising the Ghana Ports and Harbours Authority (GPHA), Ghana Shippers’ Authority (GSA) and Ghana Revenue Authority (GRA) toured the sub-regional port of Dakar, Lome and Lagos to gather data on port charges and other fees.

Benonita Bismarck, Chief Executive Officer of the Ghana Shippers’ Authority (GSA), acknowledged the fact that the sector has gone through some torrid times as a result of the COVID-19 pandemic.

Exorbitant operational charges by shipping lines in the country has long been an issue for the Ghana Union of Traders Association (GUTA) since it has emerged that Ghana charges the highest amount of levies on imported goods within the Sub-Saharan region.

This makes the cost of doing business relatively high. That is why you see most of Ghanaian traders, going to Togo and Nigeria to do business. It is therefore relieving that the Deputy Minister of Transport gave the strongest indication that port levies and charges are to be reviewed following the team of stakeholders that toured ports in the West Africa sub-region to make compare port charges.

Frederick Obeng Adom stated that Government had received the report and it is receiving the due attention from the economic management team.

High freight charges are becoming a nightmare for traders and importers who say the cost of renting or shipping a container from Asia and Europe has skyrocketed.

While every national recovery will hinge on country characteristics, the success or failure of major economies and economic blocs will profoundly influence the outlook for smaller economies and developing countries.

Recent progress in the vaccination rollout in the United States and other advanced economies has raised expectations for the global economic recovery. Differences in vaccination rates are driving the divergence in growth projections, as the easing of pandemic-related restrictions and the resumption of mobility, production, trade, and travel all hinge on widespread vaccination.

 

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