New Taxes Will Shrink Businesses – Prof. Quartey

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New Taxes Will Shrink Businesses - Prof. Quartey
New Taxes Will Shrink Businesses - Prof. Quartey

The new taxes introduced by the government in the budget statement for the 2021 fiscal year are likely to collapse businesses in the country, Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Professor Peter Quartey has said.

Prof Quartey also indicated that the taxes will also increase the incentive for people to avoid paying levies.

The government introduced a Covid-19 Health Levy of a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate to support expenditures related to Covid-19 in the budget statement.

“To provide the requisite resources to address these challenges and fund these activities, the government is proposing the introduction of a Covid-19 Health Levy of a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate to support expenditures related to Covid-19,” the budget said.

Speaking at Media General’s Fourth Economic Dialogue series on Thursday, April 1, Prof Quartey stated that businesses will have no option but to pass on the cost of these taxes to consumers.

“The tax increase for instance is likely to increase the cost of doing business for many of the private sector operatives. It might reduce investments it might also increase the the the use incentive to avoid n tax, people naturally don’t want to pay tax unless we have a robust system otherwise it will lead to tax avoidance in some instances.”

The government received flak for these new taxes at a time scores of Ghanaians cost of living has gone up following the impact of the COVDI-19.

For instance, a financial analyst with the Dalex Finance, Mr Joe Jackson, said the 2021 budget statement is not bold enough.

He said given the situation the local economy is faced with following the impact of the coronavirus pandemic, the government should have been bold enough to borrow more to deal with the ravages of the pandemic.

Prior to the budget reading, Mr Jackson had asked the government to borrow more to deal with the effect of the pandemic.

Speaking on the Key Points on TV3 Saturday March 13, Mr Jackson said “Nothing has changed. We are as broke as we were before Covid.”

He added “It is not bold enough. It is the easy way out because it only introduced taxes.”

Finance Minister Ken Ofori Atta justified the introduction of the new taxes.

Answering questions relating to the introduction of the new taxes during his vetting by the Appointments Committee of Parliament on Thursday, March 25, Mr. Ofori-Atta said “Not everything is gone up. We need to burden share, we need to move forward.”

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