2022 Budget: Cut Tax to reduce Economic Hardship- MP for Navrongo tells Govt
The Member of Parliament for Navrongo Central, Hon Samson Chiragia has called on the government to as a matter of policy, use the 2022 Budget statement to cut taxes or not to introduce new taxes in order to reduce the economic hardship that Ghanaians are facing.
According to him, the plethora of taxes that the government introduced over the years have not shored up the needed revenue to propel development but have rather worsened the plight of ordinary Ghanaians, hence the need to cut the rate of taxes and as well avoid the imposition of new taxes.
Mr Chiragia made the call during an interview with EXPRESSNEWSGHANA, in expectation of 2022, Budget Statement and Economic Policy of the Government, expected to be delivered by the Minister for Finance, Ken Ofori Atta.
He further noted that the continuous rise in tax exemptions impacts negatively on how much the government mobilizes as revenue to the state for capital expenditure.
It is estimated that Ghana loses over GHC 100 billion every year in tax exemptions. Meanwhile, it is also estimated that the country needs to spend US$ 30 billion to bridge an urgent economic infrastructure gap.
Citing recent tax waivers request before parliament for approval, Hon Chiragia said, in less than a month, over $500 million dollars has been lost to taxes exemptions, emphasizing that, a November 5, 2021, Order Paper of Parliament advertised a total of GHS 440,598,840 .58 worth of tax waivers request for six companies to which in his considered view not make sense as a developing country.
Capital expenditure is the money spent by the government on the development of machinery, equipment, building, health facilities, education, etc. It also includes the expenditure incurred on acquiring fixed assets like land and investment by the government that gives profits or dividend in the future.
However, over the last five years, the Akufo Addo government introduced several taxes with anticipation of raking in the revenue to propel development but up to date not much could be said about the where about of such revenue monies.
The government also increased the taxes net by extending taxes baseline that was introduced under the National Democratic Congress (NDC) regime for temporal financial solutions.
But the Navrongo Central lawmaker said, any form of new taxes would not only further slow business and investors opportunities but would ultimately affect domestic consumption and worsen the plight of the ordinary citizen who depend largely on commercial drivers (trotro) for instance for a living.
The MP who is a member of the Public Accounts Committee of parliament opposed the government’ intention to introduce new taxes to improve revenue generation to fund the proposed 2022 budget.
“It is not about how many taxes you introduce, but how well you collect the already existent taxes. Many taxes doesn’t necessarily bring the needed revenue, increasing taxes is not tax innovation. There are many loopholes in our tax collection channels and many people and companies are using such loopholes to avoid taxes even though tax avoidance itself is not bad,” Hon Chiragia said.
He said, though he expects nothing significant improvement from the Akufo Addo government, it would also be prudent for the government to consider reversing the 50 per cent benchmark value reduction policy, which enables the customs to determine values of imports for duties at the country’s ports.
Hon Chiragia maintained that the policy over the two years made a negative impact on the Ghana local industry as most local investments companies are currently shut down and workers laid off.
This, he argued is a result of the high cost of local production while the imported substitutes enjoyed a 50 per cent reduction in customs benchmark values making imported goods prices lower and rendering local alternatives uncompetitive on the market.
The Navrongo Central lawmaker bemoaned that manufacturers and producers in the countries of origin of imported goods enjoyed support and subsidies in their production whereas those in Ghana had little or no subsidies for production.
“I strongly believe that this policy is only beneficial to a select few traders particularly big importers of goods and other commodities, especially Shopping Malls, while the entire local or indigenous businesses suffer. The consuming public has not benefitted from this reduction in benchmark values because prices of products have not gone down as expected over the past few years since the inception of the 50 per cent benchmark policy.”
Hon Chiragia, therefore, called on the government to review the policy in light of the lessons learnt over time to save the local production, manufacturing industries and retail businesses.
He said the foreign companies have partners with some locals to operate in such a way that would enable them to avoid certain taxes, stressing that the only way by which the locals could survive is for the foreign to build and rent or let out to the local for retails.
“So what the government could do is to reduce the leakages in revenue collection and as well spend on capital investment, thus, the Government should pay contractors so they too will pay taxes and for the government to get the expected revenue. The revenue flow will be slow if businesses are slow, if companies are not selling, if fuel and petroleum products prices have gone high without subsidies, people can only invest when they can have to eat. Increment of taxes only goes to benefit a few. The local businessman or woman cannot set business, as transport sector is affected, lorry fares increases,” Hon Chiragia intimated.
The MP urged government to review the taxes and introduce business friendly policies that would help them to grow in the hands of Ghanaians.
The Minister of Information has hinted on Thursday, in Accra that the government had resolved to mobilise more domestic revenue to enable it to fund the 2022 budget.
But stakeholders in the political and economic sectors faulted the move to impose more taxes on Ghanaians.
Many political actors, especially members of parliament from the minority side described the plan to introduce new taxes and excise duties to fund the 2022 budget as a bad economic policy.
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