A former Deputy Finance Minister under the previous National Democratic Congress (NDC) government, Fifi Kwetey has asked Ghanaians especially dealers in spare parts not to jubilate over government’s intention of abolishing and or reviewing 12 tax elements, including abolishing duties on the importation of spare parts.
According to him, President Akufo-Addo is unaware of the realities existing in such sectors of the economy; for which reason he is creating the impression that the difficulties can be easily resolved.
“These initiatives that the Akufo-Addo government has put before us will fully affect the nature of the economy. For example, if you are talking about import, as an economy like ours we should rather be talking about export.
“Ghanaians should just be careful because they are just creating the impression that the difficulties will be over when indeed it is the vice versa.
“If you play to the gallery, you create the impression that it is easy to remove all these taxes in order to make it affordable to the people of Ghana when you don’t even know what the reality is. Ghanaians especially these spare parts dealers should stop jubilating and pray that their unnecessary abolishment will materialize,” he said on Accra based Neat FM.
The budget, Fifi Kwetey noted will unleash more hardships on Ghanaians because the NPP government is hurriedly abolishing tax importation.
He also indicated that the removal of tax will put pressure on the cedi.
He said the cedi is falling in value to major currencies which is eroding confidence in the local currency and therefore abolishing tax importation will rather put pressure on the cedi.
Finance Minister, Ken Ofori-Atta during the presentation of the 2017 budget indicated that the Nana Akufo-Addo administration will reduce tax exemptions and also broaden the tax base as part of several measures being considered to protect and enhance the public purse.
Outlining policy initiatives aimed at energizing the private sector during the presentation of the 2017 budget statement in Parliament on Thursday 2 March, Mr Ofori- Atta revealed that government intends abolishing and or reviewing 12 tax elements, including abolishing duties on the importation of spare parts.
“Mr. Speaker, a number of tax measures have been introduced in recent years in an attempt to deal with revenue shortfalls. Some have proven to be nuisance taxes. They have low revenue yielding potential and at the same time impose significant burden on the private sector and on the average Ghanaian. As part of our commitment to reenergize the private sector, Government has decided to review these taxes to provide relief for businesses. The following specific measures shall be implemented in the short to medium term:
* abolish the 1 percent Special Import Levy;
* abolish the 17.5 percent VAT/NHIL on financial services;
* abolish the 17.5 percent VAT/NHIL on selected imported medicines, that are not produced locally;
* initiate steps to remove import duties on raw materials and machinery for production within the context of the ECOWAS Common External Tariff (CET) Protocol;
* abolish the 17.5 percent VAT/NHIL on domestic airline tickets;
* abolish the 5 percent VAT/NHIL on Real Estate sales;
* abolish excise duty on petroleum;
* reduce special petroleum tax rate from 17.5 percent to 15 percent;
* abolish duty on the importation of spare parts;
* abolish levies imposed on kayayei by local authorities;[ES1]
* exempt from taxation, the gains from realization of securities listed on the Ghana Stock Exchange or publicly held securities approved by the Securities and Exchange Commission (SEC);
* reduce National Electrification Scheme Levy from 5 percent to 3 percent;
* reduce Public Lighting Levy from 5 percent to 2 percent;
* replace the 17.5 VAT/NHIL rate with a flat rate of 3 percent for traders; and
* implement tax credits and other incentives for businesses that hire young graduate