The Finance Minister, Mr Ken Ofori-Atta, has hinted of plans to introduce more tax reforms in the 2018 Budget and Economic Policy Statement as part of plans to lessen the burden on the private sector to enable them to reinvest and expand their operations.
The reforms will include a reduction in the corporate tax rate from the current 25 per cent to 20 per cent, the minister said, explaining that the measure was to ensure sustainable growth of the economy.
The 2018 Budget and Economic Policy, which is presently at the consultative stage, will focus on developing the industrial and agricultural sectors of the economy. It is expected to be presented to Parliament on November 15, this year.
Mr Ofori-Atta told the Graphic Business on the sidelines of a meeting on September 6 that the government was keen on introducing more tax reforms to help free the private sector to be able to grow and support the economy.
“The government is considering a reduction in taxes in the 2018 Budget and Economic Policy and this is geared towards bringing the economy back on the path of sustainable growth and development,” he said.
Among the economic interventions announced in the budget statement and economic policy of the government for the 2017 financial year was the removal and downward adjustment of 11 taxes to ease the high cost of doing business in the country.
Taxes such as the 17.5 per cent Value Added Tax (VAT) on financial services, domestic air tickets and imported medicines were scrapped, while others such as the one per cent special import levy was also removed.
Also, excise duty on petroleum duty on imported spare parts, levies imposed on ‘kayayei’ and religious institutions and the five per cent VAT on real estate were abolished.
Meanwhile, the 17.5 per cent special petroleum tax rate was reduced to 15 per cent, the five per cent national electrification scheme levy was reduced to three per cent and the five per cent public lighting levy was also reduced to two per cent.
Augmenting the losses
However, the reduction in corporate tax from 25 to 20 per cent was part of promises made by the governing New Patriotic Party (NPP) ahead of the 2016 general election.
The paper, earlier this year, gathered that although the reduction of the corporate tax rate was initially captured in the 2017 budget, it was removed at the instance of some industry players who argued that they needed incentives to boost production and not tax cuts.
To help restore losses in revenue the country will incur as a result of these tax reforms under consideration, Mr Ofori-Atta said the government had already initiated a move to widen the tax net through the introduction of a robust national identification (ID) system.
“We are clear on the philosophy of tax reforms we intend to introduce in order to help create economic space for the private sector to operate. But we believe that being able to expand the tax net through the introduction of a vibrant national ID system is very crucial,” he said.
“So what we are doing is to widen the tax net by strengthening the national ID system in order to get enough people to contribute towards national development.
“Another example is that our property tax system is non-existent and that is an area we intend to look at,” Mr Ofori-Atta said, indicating that the government’s mission was to reduce taxes on productive sectors of the economy to help place the economy back on the path of sustainable growth and development.
Meanwhile the government, on Thursday, September 7 began a stakeholder consultation to seek inputs into the 2018-2021 medium-term budget to be presented to Parliament by November 15, 2017.
The stakeholder engagements are a platform for promoting citizens’ participation, transparency and accountability in public expenditure management. — GB