According to him, it will instead empower the private sector to expand and also employ more people.

“On the face of it, when you cut taxes, the understanding is that you are losing revenue, but on the flip side, it means that you will take some financial burden off businesses which then enables them to expand and in expanding they will employ more people. And therefore you are able to solve some of your unemployment problem,” he added.

[contextly_sidebar id=”Rqs5vPWuToWvVfKvVKuPdLr8jBAVvcaU”]The Minister made the remark on the Citi Breakfast Show on Tuesday.

He made the comment on the back of an announcement made by the Minister of Finance, Ken Ofori-Atta with regards to the scrapping of some taxes considered as “nuisance.”

Some of the taxes scrapped include and tax on imported spare parts, as well as market tolls paid by head porters also known as “Kayayei.”

Speaking on the Citi Breakfast Show on Tuesday, Mr. Hamid explained that, the tax cuts will stimulate growth of the Ghanaian economy.

“When the Finance Minister announced the scrapping of taxes on imported spare parts, there was jubilation at Abossey-Okai, and then immediately the leadership of the spare parts dealers at Abossey-Okai said that they themselves were going to go from shop to shop to ensure that every trader in Abossey-Okai was tax compliant, to ensure that they pay their taxes to government.”

“…When that happens, even though you’ve lost some revenue, you will get it back through the commitment of these people who are excited that you have relieved them of some burden. So cutting taxes may not necessarily mean that you have lost revenue as such because it will stimulate the growth of businesses and therefore help you to employ more people and those people who are employed will also pay taxes. So it is a give and take affair,” he added.

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By: Godwin A. Allotey/citifmonline.com/Ghana
Follow @AlloteyGodwin

The post Tax cuts won’t affect gov’t revenue – Mustapha Hamid appeared first on Citi 97.3 FM - Relevant Radio. Always.

[contextly_sidebar id=”OeH8Cs4lKwxTmI1RXRHYX5vvPmlmLO8U”]He argues that government will also be compelled to resort to cutting down on some critical expenditure to make up for the shortfall.

“It appears that the Minister seems to have shifted the debate to the middle because he is the one who is going to face reality… how do you finance free SHS, how do you finance the one million US dollars for the constituencies?” Seth Terkper quizzed.

He added, “We are told that some monies will be taken from the District Assemblies; the very ones that are going to be losing their revenue base. So they are very hard choices and it’s up to the Minister of Finance in consultation with the President and cabinet to show reality.”

Finance Minister, Ken Ofori Atta during the budget presentation on Thursday, announced that about eight taxes that will be abolished whilst four others will be reviewed.

The taxes to be abolished include the 1 percent special import levy, and the 17.5% VAT on financial services and domestic air tickets.

The move has been met with excitement from the beneficiary sectors. But Seth Terkper told Citi Business News government may suffer severe challenges considering some risks that confront the economy.

Some of the factors that the former finance minister alluded to include; falling crude oil prices, low revenue mobilization, among others.

“We are in the race with Kenya and others by African standards, and the NPP government can up its game. But some of these are regional so it means that the economy even if it doesn’t make 7%, it’s going to double around 6% from the 3% margin it is currently. With luck, the coming on-board of the TEN Fields, and the possibility of fixing the FPSO Kwame Nkrumah and commencement by Sankofa towards the end of the year should rake in forex and exports will shoot up.”

Other taxes that are up to be abolished are; 17.5% VAT/NHIL on selected imported medicines that are not produced locally, 17.5% VAT/NHIL on domestic airline tickets, 5% VAT on real estate cost, and  Duty on imported spare parts.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Gov’t may reduce expenditure over tax cuts – Terkper appeared first on Citi 97.3 FM - Relevant Radio. Always.

According to him, the move is not fair especially since truck pushers, sachet water sellers among other hawkers also pay similar tolls.

The Former Minister while speaking on the Citi Breakfast Show on Friday, clarified that although he was not against the ‘kayayei’ toll exemption, he thinks “they [kayayei] are not the only category [of potters] and you [Finance Minister] may be using discriminatory tax approach.”

[contextly_sidebar id=”UiW90DBjruSk0cs9j0w395SAHLHVHgWv”]The Minister of Finance, Ken Ofori-Atta, while presenting the 2017 budget statement to Parliament on Thursday, disclosed that government had scrapped some taxes including the kayayei market tolls.

He also announced the downward review of some taxes and levies government considered as “nuisance.”

But Mr. Terkper, told Bernard Avle on the Citi Breakfast Show that government must extend the tax relief package to cover other potters as well.

“Is it just Kayayei or does it also cover truck pushers or if you go to the north does it cover those who are riding motorbikes, tricycles which is a form of portage? So Kayayei is just one form of portage. Is the minister saying that all these are going to be eliminated or is just the use of kayayei to gain some sympathy?”

The Former Minister added that, “There are those who carry sachet water [on their heads] and risk their lives. Many of these are compelled to pay tolls because if you go to many district assemblies, market tolls are their main source of IGF [internally generated funds], apart from the district assembly common fund. So is the central government going to provide further support at a time we are also being told that the assemblies’ common fund is going to be paved for purposes of the [free] SHS?. Are you going to look at the category of all those who are in all that group and come up with a package for them or just something catchy to gain applause,” Mr. Terkper asked.

List of taxes abolished/reviewed

Below is the list of taxes either scrapped or reviewed downwards by the Akufo-Addo government.

– The 1% Special Import Levy

– Kayayei market tolls

– 17.5% VAT/NHIL on financial services

– 17.5% VAT/NHIL on selected imported medicines that are not produced locally

– 17.5% VAT/NHIL on domestic airline tickets

– Duty on imported spare parts

– 5% VAT/NHIL on Real estate sales

– Exercise duty on petroleum List of reviewed taxes

– Corporate income tax to be progressively reduced from 25% to 20% in 2018.

– Replace 17.5% of VAT/NHIL with 3% flat rate for traders

– Tax credits and other incentives for businesses that hire young graduates from tertiary institutions

– Tax incentives for young entrepreneurs

– Reduce special petroleum tax rate from 17.5% to 15%.

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By: Godwin A. Allotey/citifmonline.com/Ghana
Follow @AlloteyGodwin

The post Scrapping Kayayei toll ‘discriminatory’ – Terkper appeared first on Citi 97.3 FM - Relevant Radio. Always.

Whilst Dr. Amoako-Tuffour considers some tax cuts may be obvious given their burden, he noted in an open letter to the nominated Finance Minister, Ken Ofori-Atta, that “hurried tax cuts and exemptions will do little to boost productivity or spur growth.”

[contextly_sidebar id=”3Q9YJBdj34WEN3E43ue9Ql28ksycla5l”]The NPP indicated that, its management of the economy would see a shift in policy from taxation to production, to relieve the burden on the private sector and boost production.

To realize this shift from taxation to production, the NPP has targeted the removal or slashing of some taxes.

Dr. Amoako-Tuffour in the letter suggested that, the sound management of the economy could be achieved by accelerating economic growth, increasing revenue mobilization and prudent spending.

Acknowledging that the point of increasing revenue mobilization was somewhat at odds with the NPP’s manifesto promise, he instead noted that “policy consistency, sequencing and a fine balance between equity and efficiency matter when it comes to sharing the tax burden to finance public enterprise.”

Improving machinery for tax collection

Dr. Amoako-Tuffour also stressed the need to improve the machinery of tax collections along with the need “to close the revenue escape hatches.”

“Next to customs duties, the management of direct taxes (profit and income taxes) is one of the weakest arms of the domestic tax system and it remains a major source of revenue leaks,” the economist noted.

He lamented the “slow motion” progress in domestic revenue mobilization over the past decade, noting that the focus of collection has not shifted from reforming legislation to implementing laws efficiently.

He also noted that personnel in charge of taxation are partly to blame for the low taxes due corruption.

“Those who must collect the taxes and enforce compliance are not without blame. The corrupt and embezzlers of revenue collected have been winning. Strung out behind them is ineffective accountability and partisan political interventions in the implementation of the tax system,” he said.

“Your commitment to action to tackle institutional habits, leakages and escape hatches offers the best opportunity in the short run to realize more non-inflationary revenues,” Dr. Amoako-Tuffour said to the nominated Finance Minister.

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By: Delali Adogla-Bessa/citifmonline.com/Ghana

The post Hurried tax cuts won’t boost growth, productivity – Amoako-Tuffour appeared first on Citi 97.3 FM - Relevant Radio. Always.