AGI welcomes tax reliefs but wants energy costs reduced
The Association of Ghana Industries (AGI) has welcomed government’s decision to reduce and abolish some taxes it described as nuisance taxes.
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The President of AGI, Mr James Asare Adjei, speaking to the GRAPHIC BUSINESS after the presentation of the 2017 budget statement, said the tax relief was a major boost for the private sector as it would stimulate growth in the sector.
He said it would also help increase production in the manufacturing sectors and help create many jobs.
“AGI welcomes the budget which has focus on making sure the private sector is stimulated. A lot of initiatives have been identified in the budget and it is early days yet for us to be able to digest and know how some of these things are going to be implemented,” he stated.
He said the association would, therefore, engage the government more, going forward, in order to fully understand its policy statements and strategies for the private sector.
“We will be engaging government and look at the key areas which have been mentioned that will have positive impact on private sector growth,” he said.
“We have seen good initiative and intentions and what is important to us as an industry advocacy group is to ensure effective implementation of the things that have been outlined in the budget,” he added.
Tax reliefs
The Finance Minister, Mr Ken Ofori-Atta, has announced that government would abolish some taxes, which include one per cent special import levy, 17.5 per cent VAT/NHIL on selected imported medicines that are not produced locally, 17.7 per cent VAT/NHIL on financial services, 17.5 per cent on domestic airline tickets and five per cent VAT/NHIL on real estate sales.
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The government also intends to abolish excise duty on petroleum, duty on the importation of spare parts, levies imposed on ‘kayayei’, replace the 17.5 per cent VAT/NHIL rate with a flat rate of three per cent for traders and implement tax credits and other incentives for businesses that hire young graduates.
Cost of energy
Mr Asare Adjei, however, pointed out that one area which the association would have loved the budget to clearly touch on was the cost of electricity in the country which was crippling lots of businesses.
He said energy cost was a key challenge to business growth in the country and he was, therefore, looking forward to something specific in the budget in that regard.
“We need a significant decrease in energy cost to make us competitive in the global environment. We are competing with businesses who get power at three to five cents per kilowatt hour, while we get it at 19-21 cents per kilowatt hour. How then do we compete?” he asked.
He said the reduction could come from either removing the energy sector levy or ensuring that power-generating companies become more efficient in their operations.
“If you generate power and see about 23 per cent of it going waste by way of technical and commercial losses, then your pricing will be definitely be high.”