Wia dis foto come from, GPHA/Facebook
4 April 2023
Association of Ghana Industries (AGI) leaders express dia disappointment over de introduction of three new taxes wey govment pass into law.
De Excise Duty, Growth and Sustainability Levy and Income Amendment Bills according to AGI dey create unfavorable business environment for local industries.
Inside statement wey dem issue, AGI talk say de passage of dis bills dey add to de already harsh economic climate which dey destroy businesses.
Dem list some of de harsh policies, taxes and economic conditions which dey kill dia businesses.
Wia dis foto come from, AGI
1. VAT Rate of 15%
In November 2022, Ghana govment increase Value Added Tax (VAT) by 2.5%.
Dis increase VAT from 12.5% to 15%, de impact be say prices of goods go go up so far as e get VAT component.
According to govment dis be part of efforts to increase de revenue generation drive of govment.
Finance minister, Ken Ofori Atta make de announcement during de reading of de 2023 budget for parliament.
How VAT dey work be say govment dey take percentage from de total cost of product.
So if product dey cost Ghc100 and de current VAT rate be 15%, consumers go pay Ghc115 for de product.
Which means govment dey take Ghc15 for VAT on de retail product while de merchant go keep Ghc100.
De recent increase in VAT make cost of product more expensive, business operators for reduce dia profit margins to make de products affordable to consumers who dey avoid expensive products.
2. 172% water tariff increment for beverage manufacturers
One of de challenges local businesses dey face be de 172% increase in water tariffs for beverage producers.
In September 2022, govment introduce dis new group of water consumers who dem categorize as – Commercial Bottled Water and Drinks.
De Association of Ghana Industries (AGI) say dis high tariff increase production cost, which de affect dia supply and profits.
3. Inflation rate of 52%
Wia dis foto come from, Getty Images
Inflation rate for drop for de second time dis year to 52.8% for de month of February.
Dis reduction in inflation be partly due to de stability of de Ghana cedi since January 2023.
Samuel Kobina Annim, Government Statistician reveal say dem measure prices for de February 2023 inflation rate from 47,877 products from 57 markets across de 16 regions of Ghana.
With de stable cedi, de fuel prices dey also see some stability according to some critics, no be gold for oil policy dey cause reduction in fuel prices.
Inflation for Ghana rise from about 13% in January 2022 to around 33.9% by September and 54.2% in December 2022.
De high inflation rate dey come with associated economic challenges like increase living costs for Ghanaians who dey spend more on food, goods, shelter den tins and low productivity for local businesses.
4. Bank of Ghana increase policy rate to 29%
Central Bank of Ghana increasing interest rate on long term loans to 29.5%.
Dis move come as surprise sake of de stable outlook of de economy for two months now.
Despite dis stability, de increased policy rate mean say businesses and individuals who go borrow from banks go pay 29.5% interest rate on dia loans.
De recent policy rate increase by 150 basis points, dis dey bring de cumulative increase to 1,600 basis points since since November 2021 when govment start dey tighten policy rate.
Four other conditions which dey affect business
Apart from de first four taxes, policies and conditions wey dey affect business, dis be some of others one’s business operators dey struggle with.
Electricity tariffs increase to 29.9% for industry Unstable foreign exchage for over one year now Increase in residual fuel oil price sake of govment subsidy withdrawal Levies and taxes on imported raw materials rise catch 50%
How Ghana parliament introduce 3 new taxes
De lawmakers vote 136 – 137 majority decision to approve Income Tax Amendment Bill, Excise Duty Amendment Bill and Growth and Sustainability Amendment Bill into law.
According to Ghana govment, dis three new taxes go help generate some Ghc4 billion domestic revenue.
Business community push back against de passing of de new revenue bills but Finance Minister, Ken Ofori-Atta argue say passage of de Bills be key to de release of de long awaited IMF loan.
Ghana govment currently dey search Board Approval for $3 billion International Monetary Fund (IMF) Programme staff-level agreement.
