In the current economic climate, tax reform has become an urgent necessity for fostering economic growth, expanding businesses and especially creating more jobs. In a story we carried yesterday, the Chief Executive Officer of VODEC Africa, Daniel Asomani, joined the leading voices advocating for forward-looking tax reforms.
He said at the National Emerging Leaders’ Economic Forum 2024 that the several existing taxes, including the COVID-19 levy, E-levy, Emissions tax, have outlived their purposes. He urged their replacement with more proactive mechanisms that can liberate the masses – particularly the youth – from economic despair.
The appeal reflects a growing consensus that the current tax regime is stifling entrepreneurship and innovation, a sharp contrast to the mantra of focusing on production rather than taxation.
Experts have expressed views that taxes designed for emergency responses, such as the COVID-19 levy, should be phased out to enable businesses, especially startups, to thrive.
We acknowledge and agree with the argument that it will be absolutely impossible for the COVI-19 levy, for instance, to be scrapped immediately. This is because the revenue projections for the 2024 financial year include the COVID-19 levy. So, it can only be scrapped hopefully when the next government presents the economic statement and fiscal policy for the 2025 financial year.
In our view, the advocacy for tax reform calls for a broader shift toward fairness, equity, and efficiency in governance. By embracing a tax system that is simpler, more transparent and supportive of entrepreneurship, we envision a Ghana where the youth are empowered to lead the country into a sustainable and prosperous future.
We have read from the Chief Executive Officer of the Ghana Chamber of Commerce, Mark Badu-Aboagye, who described the current tax regime as “suffocating” for businesses and we agree with him.
He sees the complex web of taxes, especially the value-added tax system, as not only punitive but also counterproductive, leading to increased tax evasion and avoidance. Badu-Aboagye makes the point that simplifying the tax structure and lowering rates would likely result in higher compliance and increased revenue, as businesses would no longer feel burdened by convoluted tax policies.
It is on this note that we look forward eagerly to the realisation of the promise by the New Patriotic Party to give tax amnesty for all payers to start on a fresh note and also introduce a flat rate system.
The party has promised in its 2024 manifesto that the tax amnesty and the introduction of a flat rate will be implemented, should it win the 2024 election. The explanation given is that a Bawumia presidency intends to expand the tax net, make it more easy, affordable and predictable for businesses and citizens to pay and in turn maximise revenue mobilisation.
While the need for revenue is undeniable, we are of the view that a balance must be struck. When E-Levy was introduced, the government had anticipated raking in about one billion Ghana cedis, but that remained only a projection. That tax, which raffled feathers, did not leave up to expectation, making people to describe it and the COVID-19 levy as nuisances.
Another reason The Chronicle supports the advocacy for tax reform is that we believe it could significantly bolster the government’s One District, One Factory (1D1F) initiative by reducing financial burdens on businesses, encouraging investment and fostering local production.
The 1D1F policy is in particular one initiative that must be sustained in the spirit of promoting production in Ghana. It is our hope that regardless of which party wins the 2024 elections, more factories will be set up and the government of the day will ensure that they operate efficiently through tax reforms, among others.
Tax reforms aimed at simplifying the tax structure, reducing the burden on businesses, and encouraging sustainable practices could play a pivotal role in bolstering the private sector, especially.
