Tax consultant and Senior Lecturer at the University of Ghana (UG), Dr Abdallah Ali-Nakyea, has called for the reversal of straight levies imposed on businesses by government.
According to Dr Ali-Nakyea, straight taxes such as the National Health Insurance Levy (NHIL), GETFund and the recently introduced 1% Covid-19 Health Recovery Levy, increase businesses’ cost of production as businesses are no longer able to claim input tax credit through VAT.
Dr Ali-Nakyea argues that, given the current circumstance whereby businesses have been severely hit by the Covid pandemic, such straight levies should be reversed from for a year or two for businesses to have ‘a breathing space.’
“I think the challenges businesses have has to do with the tax base which is to decouple the NHIL and GETFund and make them straight levies, because these increase their cost of doing business and they are unable to get the input tax credit and now we have added Covid-19 levy, so tentatively their cost of doing business has increased because they incur more costs when they buy and they can’t also claim the input credit. So they can only way to recover is to adjust their prices and that is what we are seeing,” he stated.
“I think in this covid times the best government can do for businesses even if it is for a year or two, is to reverse the straight levies and deductable input credit in the VAT and that will give businesses a breathing space,” he added.
Dr Ali-Nakyea made the above assertions at the IMANI-GIZ Reform Dialogue Series themed Business Taxation and the Road to Ghana’s Post-COVID Economic Recovery, held on Wednesday, May 12, 2021.
IMANI-GIZ Reform Dialogue Series focused on how to lessen the total burden of business taxation across multiple sectors, rationalise the tax exemptions regime, and use digitalisation and other initiatives to improve tax compliance.
The dialogue also sought to discuss how Ghana’s theoretical tax frontier can be used as a proper benchmark for evaluating the performance of Ghana’s revenue collection agencies going forward.
Some key discussions made at the dialogue series include;
- Exploring creative ways of using tax policy to support business growth and job creation while also generating enough revenues for the state.
- Examining Ghana’s tax exemptions regime and how it can be improved.
- Examining Ghana’s business taxation regime to identify nuisance taxes in various sectors and industries.
- Examining progress on digitalisation and other initiatives that aim to improve tax payments, reduce tax avoidance, tax evasion and base erosion and profit shifting.
