Ghana’s business environment is facing a new challenge as the Ghana National Chamber of Commerce and Industry (GNCCI) warns that businesses may flee the country due to the government’s heavy tax burden.
The warning follows the recent passage of three controversial taxes into law by parliament, namely the Income Tax Amendment Bill, the Excise Duty Amendment Bill, and the Growth and Sustainability Amendment Bill, which are expected to generate GH¢4 billion annually. However, the GNCCI CEO, Mark Badu-Aboagye, expresses doubts about the government’s ability to generate this revenue and warns of downsizing and business closures.
The GNCCI’s warning highlights the growing concern among businesses over the heavy tax burden in Ghana, which is threatening their profitability and sustainability. This concern is not new, as businesses have been raising alarm bells over Ghana’s tax environment for some time now. The latest taxes passed by parliament have only added to their woes.
According to Mr. Badu-Aboagye, the businesses will relocate to countries that offer a more conducive environment for their operations to thrive. This is a worrying trend for Ghana, which is struggling to attract foreign investment and create jobs for its growing population. The country’s economy has been hit hard by the Covid-19 pandemic, and the government is under pressure to find new sources of revenue to fund its programs and initiatives.
The GNCCI CEO also doubts the government’s ability to generate GH¢4 billion annually from these taxes, as he warns of a high incidence of tax avoidance. He argues that the incidence of these taxes is on businesses and the consumers of their products, which will only add to their financial burden. He questions how the government can tax businesses that are not making profits, which suggests that many businesses in Ghana are struggling to survive.
The Ghana Union of Traders Association (GUTA) has also expressed its frustration over the passage of the taxes, insisting that Parliament has failed Ghanaians. According to the GUTA PRO, Joseph Padi, the timing for the passage of the taxes is bad, as the country is still recovering from the Covid-19 pandemic. He suggests that the government should focus on closing the leakages in the system rather than introducing new taxes
The GUTA’s criticism of the government’s tax policy is not unique, as many businesses and economists have been calling for a review of the tax system in Ghana. They argue that the tax burden is too high, and it is hindering the growth and development of businesses. They suggest that the government should consider reducing taxes or introducing incentives to encourage investment and job creation.
The warning by the GNCCI that businesses may flee Ghana due to the heavy tax burden highlights the urgent need for the government to review its tax policy. The government needs to find a balance between raising revenue and supporting businesses’ growth and development. It is essential to create a conducive environment for businesses to thrive, as this is crucial for the country’s economic growth and development. The government should consider the concerns raised by businesses and stakeholders and work towards addressing them to ensure that Ghana remains an attractive destination for investment and business.