Adnan Adams Mohammed
Business owners in the country have expressed a worsening situation of unemployment in coming months as their cost of doing business is set to increase since the government has remained heedless to their plea.
Members of trade unions; Ghana Union of Traders Association (GUTA), Association of Ghana Industries (AGI) and Ghana Chamber of Commerce and Industry (GCCI) have in the past weeks used all available lobbying and advocacy processes to catch government’s attention to reconsider the full scale implementation of the three new tax policies contained in the tax amended laws passed and assented by president recently since they have high tendency to collapse and stifle growth of businesses thereby resulting in layoffs.
The business operators fear that, the situation will also result in increase in prices of goods and services in the coming days which will erode the gains made so far. GUTA has explained that, it members (employers and shop owners) cannot absorb the taxes and would be forced to push it to the end consumer.
”Business people must protect their interests by increasing prices and cutting down on costs because you cannot make young people work without pay,” Deputy General Secretary of GUTA, Mr Richard Amamoo, lamented in an interview last week. ”When you come to the trading sector of the economy, shop owners have asked many of their sales boys and girls to go home to enable them to maximise cost.”
He said shop owners who had 20 salespeople have laid off 10 to cut costs, noting that, in the wake of the high cost of doing business, it is increasingly becoming difficult for traders to stay afloat.
Already, the Ghana Statistical Service has revealed in its Quarterly Labour Statistics Report that, about 1.76 million persons were unemployed in the third quarter of 2022. Within the three quarters, about 157,000 persons experienced an unemployment spell that is they were unemployed in all the quarters.
The report further said close to 7.5 million persons remained employed throughout the three quarters out of the about 11 million persons employed in each quarter.
Despite this gloomy picture of the unemployment situation in the country, the Ghana Revenue Authority (GRA) announced the kickstart of implementation of the three new taxes starting May 1, 2023.
According to the government, the new taxes: Excise Amendment Act, 2023; Income Tax Amendment Act, 2023; and the Growth and Sustainability Levy Act, 2023, will raise revenue and meet the conditions for a US$3 billion International Monetary Fund (IMF) programme.
The new tax policies are expected to rake in GH¢4 billion for the country annually.
Meanwhile, the Ghana National Chamber of Commerce and Industry is warning of the collapse of many businesses in Ghana, following the implementation of the three new tax laws.
According to the Chief Executive of the Chamber, Mark Badu-Aboagye, is dangerous and would force many businesses to relocate to other countries.
“We are not happy, we are highly disappointed that this bill has been assented and has become a law. Actually, we sent a petition to the president of Ghana to at least give us a hearing, and also inform him about the difficulties we are going through and even forward some recommendations on how they can still get the revenue and also bring some relief to businesses”.
“But unfortunately the president [Akufo-Addo] has ignored all the concerns that we raised; so definitely, we are not happy but this does not take away the fact that these taxes are inimical and counterproductive and is not going to help businesses”, he lamented.
Mr. Badu-Aboagye pointed out that businesses are already overwhelmed with so many taxes and therefore any additional taxes will be inimical to their growth.
“We’ve made it clear that already, businesses are suffering. The cost of doing business is high, we have a lot of taxes that businesses are already paying, so any additional taxes to the existing tax is not going to be in the interest of businesses”.
He continued that research conducted by his outfit revealed that though business in Ghana are profit and growth oriented, too many taxes and rising interest rates have pushed them into loss positions.
“In fact, the research that we conducted not long ago indicated that businesses in Ghana are profit and growth oriented, but when these taxes and interest rates are factored in, then most of them begin to run at a loss. So with these taxes, businesses are going to collapse and others have started relocating…… those who would want to take advantage of better deserved conditions are relocating and businesses
Also, the Chamber of Agribusiness Ghana is alarmed with the wholesome implementation of the taxes, saying, they are nuisance taxes on agribusinesses, agripreneurs and consumers in the agribusiness value chain.
Sharing its position on all the policies and the likely outcome of the implementation, the Chamber posited that, on the Growth and Sustainability Levy, the Chamber said “it will be challenging to collect this levy from mining and petroleum companies that have stability clauses in their agreements”.
The clause states that no change in fiscal legislation shall affect them until after their stability period (which can be anywhere from 15 to 25 years, depending on the agreement).
The chamber explained that those without such provisions will likely try to internalise them, which will raise their production costs and lower their profits, ultimately increasing their taxable corporate income”.
With regards to the Income Tax (Amendment) Act, the chamber argued that “it’s fascinating to see that these people pay taxes at the same rate (35%) as mining and petroleum firms, which is far higher than the rates paid by companies in the hospitality industry (25%), the banking sector (22%), leasing and agricultural sectors (20%).
It added that “if these wealthy people want to avoid paying taxes at a rate of 35%, why not form corporations and have their dividends subject to a final tax rate of 8%?”
Touching on the Excise Duty (Amendment) Act, it refuted the assertions that the act will help shore up revenue.
“Taxation is not all about raising revenue and so this act should not be seen exclusively as a revenue raising measure but a measure to deal with importation and consumption of harmful goods. In as much as the increased raises will bring-in some revenue that cannot be the main purpose”.
The chamber in the meantime urged its members to diversify their raw material sourcing, making use of alternatives available locally.
“Leverage the value-based pricing method to cost your products and services consciously cut the use of utility and fuel that is electricity and water. Ensure your factory or agribusiness limits wastage. Start making investments in other forms of electricity generation like solar. Leverage suitable technologies to minimise labour cost and extra expenditure”.
