On March 31, 2023, the Parliament of Ghana passed three revenue tax bills, namely the Income Tax Amendment Bill, Excise Duty Amendment Bill, and Growth and Sustainability Amendment Bill. The bills collectively aim to generate an estimated GH¢4 billion per year to supplement domestic revenue. However, the President of the Ghana Union of Traders Association (GUTA), Dr. Joseph Obeng, has expressed his disappointment with the approval of the taxes.
Dr. Obeng has highlighted the negative implications that the taxes will have on the rate of tax compliance by businesses. He noted that the approval of the taxes will discourage businesses from honoring their tax obligations, which could ultimately affect their growth and sustainability. According to Dr. Obeng, Ghanaian businesses are already struggling to compete in the West African Sub-Region due to high taxes. Thus, the additional taxes will further discourage trade and make it difficult for businesses to remain competitive.
The high commercial lending rate is another major concern for Dr. Obeng, as it serves as a big disincentive for businesses in the country. He noted that the commercial lending rate is currently at 40 percent, making it extremely challenging for businesses to pay their loans and still have enough money to pay taxes. Dr. Obeng has expressed disappointment with how democracy is being practiced in Ghana, noting that the approval of the taxes is all about imposition, which is likely to impede the growth of local businesses.
Dr. Obeng has also called on the government to explore other sectors to raise revenue instead of burdening local businesses with taxes. He emphasized the need to curtail leakages at the Free Zones and Warehousing to help raise the necessary revenue.
The passage of the three revenue tax bills is expected to generate a significant amount of revenue for the government. However, the concerns raised by Dr. Obeng highlight the need for the government to carefully consider the impact of its policies on businesses, especially small and medium-sized enterprises. While taxes are necessary to fund government operations and services, they should not be a burden on businesses that are already struggling to survive.
Dr. Obeng’s concerns highlight the need for the government to carefully consider the impact of its policies on businesses, especially those that are struggling to remain competitive. It is crucial for the government to find a balance between raising revenue and supporting the growth and sustainability of businesses in the country.