Dr. Mahamudu Bawumia, running mate to the 2016 Flagbearer of the opposition New Patriotic Party (NPP), Nana Akufo-Addo, has said that an NPP government will immediately review the various taxes that he says have burdened the Ghanaian people and the private sector, if the party wins the November polls.
He also said the NPP will review the Income Tax Act 2015, to abolish the taxes on pensions and allowances.
Media reports have indicated that the government is planning to tax a part of pension contributions per comments attributed to the Finance Minister, Seth Terkper.
The Ministry of Finance has since explained its stance on the issue of taxation of pensions in the country.
NPP will prioritize the welfare of the Ghanaian people over taxation
Dr. Bawumia noted that the NPP under their flagbearer, Nana Akufo-Addo, has a significantly different vision which prioritizes productivity, jobs and the welfare of the Ghanaian people over taxation.
He made these comments to students and lecturers of the E.P. College of Education, Amedzofe in the Volta Region .
According to Dr. Bawumia, “An NPP government will build the most business friendly and most people friendly economy in Africa. This means that job creation will be at the heart of economic policy. A lot of the other taxes we are seeing today will be scrapped. We will reduce the tax burden on our people and businesses so that they can employ more people and introduce a Tax Credit scheme for Companies that employ fresh graduates so that we will increase the employment of fresh graduates.”
He explained that pensioners are one of the most vulnerable people in society and gains made on investments in pensions are part of pensions and should be protected as it will not only make pensioners more comfortable, but will also ensure that individuals have a bigger capacity to invest in businesses or simply increase savings and therefore, access to credit.
Dr. Bawumia, a former Deputy Governor of the Bank of Ghana, added that for the NPP, the ideal way of increasing tax revenue is by formalizing the economy through the issuance of National IDs and a properly functioning Property Address system, which will expand the tax net and by growing the economy through a focus on jobs and productivity.
Finance Ministry clarifies pension taxation issue
According to the Finance Ministry, an earlier explanation made by the Minister of Finance, Mr. Seth Terkper on the Income Tax Act, 2015 (Act 896) at a forum on Tuesday has been misconstrued.
Some reports said the Mr. Terkper had said allowances and pensions were being taxed under the new income tax law, Act 896, 2015, because they were considered forms of income no matter how they were earned.
But a statement copied to Citi Business News indicated that the reference to the pension income in Mr. Terkper’s delivery was to explain the idea of taxation of pensions adopted generally in literature and in countries that tax pensions.
It pointed out that Article 199 (3) of the Constitution states that “the pension payable to any person shall be exempt from tax”.
The statement further explained that the Income Tax, 2015 (Act 896) treats pension as an exempt amount under Section 7(1) (d) which means that any amount paid as pension shall not be taxed.
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By: citifmonline.com/Ghana