Ghana’s President Nana Akufo Addo
The government of Ghana is facing backlash following its hasty approval of three new taxes. The income tax, excise duty, and growth and sustainability amendment bills were passed late at night on the 31st of March.
The new taxes are a crucial part of the much-needed IMF financial assurances to secure funding from the lender and are also expected to generate 4 billion cedis annually to supplement domestic revenue.
With the reality of the tax burden now sinking in, the President of the Ghana Union of Traders Association (GUTA), Dr. Joseph Obeng says Ghanaian businesses will pay the ultimate price.
“Some of us must go and buy goods from neighboring countries such as Togo because there is no competition in the sub-region for businesses. The new bills will not only affect the trade but multiply the taxes we pay.”
According to Dr. Obeng, the business environment in Ghana is not friendly for local businesses. Citing high-interest rates of up to 40 percent, he laments that it is hard for businesses to pay back loans and more taxes will only make operations harder.
The sentiments are shared by economist Joe Jackson. In a tweet after the passing of the bill, Joe notes that the profitability of all companies will be affected by the newly passed Growth and sustainability levy. The levy will see companies such as banks, non-banks, insurance entities, telcos, breweries, and Oil Marketing companies charged 5 percent of profit before tax. Mining and upstream oil and gas companies will pay 1 percent of gross production while everybody else will be charged 2.5 percent of profit before tax.
Disappointed members of parliament including Cape Coast South constituency legislator, George Ricketts-Hagan says the passage of the taxes will only worsen the economic distress of individuals and stunt the growth of businesses in the country.
“No economy can tax itself out of the current economic turmoil. Taxes do not end poverty, nor do they nurture prosperity. Real growth will only happen if we create an enabling business environment and stable tax policy attracting local and foreign investment.”
While the taxes are a pain point for many Ghanaians they come as a relief to the government which has been in negotiations with IMF since 2022. The IMF adamant financial assurances meant Ghana had to comply with the much-needed funding to resuscitate the ailing economy.
Welcoming the news, information minister Kojo Oppong Nkrumah in a tweet said “Commendations to @parliament_gh for doing its part last night. We look to the conclusion of financing assurances from the external stakeholders so we can lock down the IMF board approval for the B.O.P. Support program.”
Ghanaians now hold their breath awaiting to endure the pain of the new taxes while hoping the IMF program will eventually ease pressure on the economy.