The Ghana Union of Traders’ Associations (GUTA) has expressed dissatisfaction with the tax reliefs outlined in the 2024 budget presented to Parliament on November 15.
GUTA believes that the granted reliefs lack significant impact and will only benefit a limited number of businesses and citizens.
During the budget presentation, Finance Minister Ken Ofori-Atta on Wednesday, announced several measures aimed at supporting businesses and the general population.
Notable reliefs include the extension of zero-rated Value Added Tax (VAT) on locally manufactured African prints, sanitary pads, and locally assembled vehicles. Additionally, import duty waivers were introduced for electric vehicles and agricultural machinery.
In addressing environmental concerns, Ofori-Atta outlined the government’s plan to expand the Environmental Excise Duty to cover plastic packaging, industrial emissions, and vehicle emissions.
Despite GUTA being consulted prior to the budget presentation, its president, Dr. Joseph Obeng, expressed disappointment that their inputs were not considered. Dr. Obeng emphasized that businesses would continue to face challenges as many of their existing issues remain unaddressed.
“We were consulted and we gave our inputs and we thought that they were going to be considered because we made very meaningful inputs, but our demands were not met especially those of us in the trading community.”
“But admittedly, some segment of the business community have gotten some reliefs and these reliefs are also positive. When you look at the relief for agric machinery, relief on raw materials for pharmaceuticals, relief for African prints, those of electric cars and all that, these are positive but they’re in the minority “he noted.
Dr. Joseph Obeng highlighted that the high cost of doing business would persist because the granted reliefs only benefit a small fraction of businesses. According to him, the measures announced in the 2024 budget do not have a broad enough impact to alleviate the financial challenges faced by the majority of businesses.
“If you look at the general cost of doing business in this country and what we were seeking, then of course I will say that the status quo remains. The cost of clearance at the port and all that everything still remains. The high rate of taxes that we are made to pay, the number of taxes that have been imposed on us, all of these have not been addressed although just a fraction that has gotten the relief, but on a broader scale I must say the status quo remains the same, and most companies are going to fall,” he lamented.
He raised concerns about the government’s decision to maintain levies such as the COVID-19 levy, questioning its relevance given that the pandemic is no longer a current threat.
“We also demanded that the COVID levy should be removed because it’s a nuisance tax. There’s nothing nuisance than the COVID levy. It came to solve a specific purpose and it should be out of the table. It’s as simple as that,” he argued.
Dr. Obeng dismissed the suggestion that the government is retaining the COVID-19 levy to offset debts incurred as part of measures to address the pandemic.
In response to that argument, he said “But we also know that some funds also came in, and we also know that the COVID pandemic came to destroy businesses. Has that also been taken into consideration; and that the pandemic that has come to destroy businesses, we impose levies on the same businesses.
“There’s no precedent anywhere in the world. And those countries did they also not incur cost in combating the pandemic.? We have to weigh and assess the issues properly to know whether we are being treated fairly”he noted.
The Special Import Levy is still on the table after it had been introduced with the same reason that we had a special problem, and that the business community should allow; that was introduced by the previous government. If we do this, it means that the business community is not going to have confidence and trust in leadership because you can’t say that something is temporary and then it becomes a tax in perpetuity when businesses are collapsing and have been overtaxed. It is not fair,” Dr Obeng bemoaned.
The President of GUTA pointed out that under these circumstances, businesses are left with no alternative but to transfer the incurred costs to consumers.
“Now we don’t have any reliefs, and the natural thing is to pass the cost to the consuming public. But how are we going to do that where consumers are also being eaten away with their purchasing power by the effects of inflation. How are they going to even absorb this cost; and so what happens eventually is that we lose our capital. This is what is going to happen,” he noted.
Dr. Obeng further criticized the existing structure of the Value Added Tax (VAT), asserting that the current system lacks fairness. He attributed the confusion often observed between traders and the Ghana Revenue Authority (GRA) to this perceived inequity in the VAT system.