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Dr John JK Kwakye – Director of Research at IEA, Mr Alex Frimpong – CEO, Ghana Employers Association
The Ghana Employers’ Association (GEA) and the Institute of Economic Affairs (IEA) have proposed various measures to the government to help boost income generation and boost the growth of the economy.
The IEA has called for a strict surveillance system, backed by a strict sanctions regime, to deter and minimize the incidence of tax evasion, while the GEA wants the abolition of the special import tax ( SIL) introduced in 2013 imposes a tax of 2%. levy to raise funds to stabilize the economy until 2015.
For GEA, the abolition of SIL will give employers the necessary respite from the current high cost of production to keep their businesses alive.
These were in GEA’s 2021 budget inputs and IEA policy priorities for the government ahead of the budget statement due to be presented to parliament today.
GEA wants modesty
The GEA statement, addressed to the chief director of the finance ministry, said the government needed to be modest in its spending to stabilize the economy and boost growth.
He said the outbreak of the COVID-19 pandemic has created many uncertainties, financial challenges and aggregate demand shortfalls for businesses and employers.
The pandemic, he said, has derailed the economy on a path of significant decline, necessitating the revision of overall gross domestic product growth forecast for 2020 from 6.8% to 1.9%. .
As a result, he said, many companies have limited their activities, with more workers at risk of becoming unemployed.
“Given the ripple effects of the shrinking economy during fiscal year 2020, it is necessary to put in place a global strategy that will consider the rapid recovery of the economy in the short and medium term without neglecting the fabric social security of citizens.
“Employers applaud the government’s determination to help businesses and the economy recover through the Business Relief and Revitalization Program (Ghana CARES) against GH 100 billion ¢ Ghana COVID-19,” he said. declared.
Go forward
The GEA said that from this year and beyond, macroeconomic stability would be very essential to foster sustainability and business recovery.
Growth of the private sector, he said, depended to a large extent on the government’s macroeconomic policies, adding that sound macroeconomic management and economic stability did not only translate into business growth and development, but also helped to improve people’s well-being and standard of living.
“Overall, we expect the 2021 budget statement to give a better picture of a conducive business environment for the year under discussion. Businesses do not expect the introduction of new taxes, as has been the case in recent years.
“Further fiscal consolidation and expansionary monetary policy measures are needed in 2021 for a stable and growing economy in all quarters of the year. We also provide for exchange rate stability to avoid exchange rate losses on the books of companies, ”he said.
Legacy
The statement said one of the best legacies COVID-19 could leave in Ghana was a significantly improved ICT infrastructure.
This, he explained, would accelerate the digitization of the economy; for example, in the agricultural sector, starting with improved planting systems and extension services through to the movement of agricultural products from farm to consumer in urban centers.
IEA on low taxation
For its part, the IEA said the low incomes were not due to low tax rates but rather the country not collecting a lot of taxes.
“Every year we lose substantial tax revenue due to various loopholes,” he said.
The IEA said the government lost revenues of more than GH ¢ 5 billion per year due to tax exemptions, which was characterized by extensive abuse.
He said that although the government passed a bill to streamline exemptions, it has languished in Parliament since 2019 as the political will to pass the bill appeared to be lacking, apparently due to entrenched interests.
The IEA therefore urged Parliament to pass the bill urgently to plug a big hole in the tax system.
“A significant portion of income is lost through tax evasion, which sometimes occurs with the connivance of tax officials. We urge that a strict surveillance system, backed by a rigorous sanctions regime, be instituted to deter and minimize the incidence of tax evasion.
“The informal sector accounts for almost 30 percent of GDP, but a large part remains outside the tax net. Most of the activities are small scale but cannot be completely ignored. We should tax businesses that employ at least a few people, such as mechanics, hairdressers, tailors and other artisans, while leaving out small fish such as kayayoo, kenkey, waakye and ice water vendors, which have minimal income, ”he said.
Digitization
The statement said that digitization and other new technologies should be harnessed in the collection of taxes on the informal sector.
He said that although property taxes were a potentially large reservoir of revenue, given the sprawling mansions in urban areas, they were barely collected.
“We suggest that the collection of property tax be entrusted to the metropolitan, municipal and district assemblies (MMDA), which should be allowed to keep some of their funds generated internally and used at their discretion,” he said. he declares.
The statement said the US Inspector General (IG) system should be adopted in government departments, departments and agencies (MDAs) to nip institutional corruption in the bud before it emerges.
He said an independent Budget Council should be created to help parliament scrutinize government budgets, contracts and procurement, which were typically a major source of corruption.
The IEA also called on the government to accept advocacy from civil society organizations (CSOs) and other forms of anti-corruption activism.
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