The Minister for Finance, Ken Ofori-Atta, has announced the abolishment and review of some taxes he termed “nuisance taxes” to promote growth in the private sector
Mr Ofori-Atta announced these interventions when he delivered to Parliament the 2017 budget statement and economic policy on Thursday.
According to him, although some of the taxes were introduced by the erstwhile National Democratic Congress (NDC) government to raise revenue, they had proven to be unprofitable means of raising money and had rather become a burden to the private sector, stifling their development.
The list of taxes to be abolished, the Minister said, included the 1% Special Import Levy, Kayayei market tolls , 17.5% VAT/NHIL on financial services ,17.5% VAT/NHIL on selected imported medicines produced locally, 17.5% VAT/NHIL on domestic airline tickets , duty on imported spare parts, 5% VAT/NHIL on Real estate sales and the exercise duty on petroleum.
He told the House that corporate income tax would also be reviewed from 25% to 20% in 2018 while the 17.5% VAT/NHIL would be replaced with 3% flat rate for traders, adding that tax credits and other incentives for businesses that hire young graduates from tertiary institutions would be reduced.
Mr Ofori-Atta disclosed that government would reduce special petroleum tax rate from 17.5% to 15% as well as provide tax incentives for young entrepreneurs.
“A number of tax measures have been introduced in recent years in an attempt to deal with revenue shortfalls. Some have proven to be nuisance taxes. They have no revenue yielding potential, and at the same time impose a significant burden on the private sector and on the average Ghanaian citizen. As part of our commitment to re-energize the private sector, the government has decided, as pledged, to review these taxes to provide relief for business,” he said.
He announced plans to set up an Infrastructure for Poverty Eradication Project to cater for its one million dollar per constituency promise.
“Under the Establishment of the Infrastructure for Poverty Eradication project, every constituency will be allocated the cedi equivalent of one million dollars to combat poverty. We will allocate one million dollars to each constituency in this house to improve the lives of rural dwellers and deprived communities,” he said.
The project, according to him, would have a direct link with government’s one district one factory project, which is estimated to cost GH¢456.3 million and create about 350,000 jobs.
“Government will implement the one district one factory programme by initiating a massive industrialization campaign across the country, which will equip and empower communities to use their local resources to manufacture products that are in high demand both in Ghana and the sub-region,” he said.
Touching on agriculture, Mr. Ofori Atta announced that government would create about 750,000 direct and indirect jobs with the ‘planting for food and jobs campaign initiative.
The finance minister said government would distribute about 180,000 metric tonnes of subsidized fertilizer for 2017 alone and develop a one export commodity in every district of the country.
“The government recognizes agriculture as the main anchor of the country’s economy. Unfortunately, we have witnessed a steady decline in the sector, and production levels have fallen consistent over the years .In the medium-term, we intend to modernize the sector to improve productivity and achieve food security and profitability for our farmers.
“….the campaign will involve the production of maize, rice, soybean, sorghum and vegetables. Other crops will be adopted in subsequent years. The campaign will be anchored on five pillars namely, provision of improved seeds, supply of fertilizers, provision of dedicated extension services, marketing, e-agriculture and monitoring. This initiative is expected to increase the production of maize by 30%, rice by 49%, soybean by 25% and sorghum by 28%. This will create 750,000 jobs in both direct and indirect employment. The Ministry will import improved seeds to augment and shortfall for the planting for food campaign,” he said.
Touching on interventions for the banking sector, Mr. Ofori-Atta told the Parliament that government would focus on improving liquidity for banks through the payment of State-Owned Enterprise (SOE) debts.
"Government will streamline the Energy Sector Levy Act, 2015 (Act 899,) (ESLA) to accommodate all the existing legacy debts for the banking and the private sector, which includes energy sector debt, Bulk Distribution Companies (BDCs), and other energy sector related debts," he said .
Mr. Offori-Atta also touched on the water for all project, Zongo Development Fund, free SHS, the pre-institution of the teachers and nurses allowances, sanitation projects, and the National Entrepreneurship and Innovative Programme.
Source: ISD (Gilbert Ankrah)