Although about six taxes have been earmarked for removal, the Ghana Union of Traders Association (GUTA) is treading cautiously with the true impact of these tax cuts on businesses until the promised Value Added Tax (VAT) reforms are completed.
The traders association says the full impact of the tax reforms announced in the budget by the Minister for Finance on Tuesday can only be ascertained if the VAT reforms are completed and implemented.
The Finance Minister in his presentation announced that the government will scrap some taxes deemed nuisance including E-levy, Emissions Levy, Betting Tax, and others.
Dr. Cassiel Ato Forson further announced that the government is also going to set the stage to restructure VAT to make it simple and affordable. This restructuring, among other things, will also result in the removal of COVID-19 Levy.
This decision by the government, speaks directly to the expectations of GUTA and the business community even ahead of the budget presentation. President of GUTA, Dr. Joseph Obeng told The High Street Journal in an earlier interview that they expect a reformed VAT system which is simple, affordable and uniform.
Following the presentation of the budget and the tax initiatives announced, President of GUTA, Dr. Joseph Obeng acknowledged that eliminating the E-Levy and Emission Tax would offer some relief to traders, particularly by reducing costs associated with transportation and financial transactions. Nonetheless, he stressed that the major concern for the trading community remains the structure and application of VAT.
The business community is therefore keen to understand the full extent of the VAT reforms, particularly whether they will include the removal of the COVID-19 levy and other tax breaks.
Dr. Obeng says the traders need clarity on these adjustments to determine the actual benefits to their businesses and overall trade activities.
“With this removal of the E-Levy, the emission tax for instance, means that there is no emission tax of the petroleum levy. And it will go in a way to put some money into the pockets of traders in terms of transportation and all that. And then the E-Levy is for money transfers and other transactions,” Dr. Josep Obeng indicated.
He added that, “but the major thing that we’re looking for is the VAT and the reforms. And so, as it has been promised that we are going to have the reforms, that’s when we have the significant impact. If the reforms are made and the COVID-19 levy is taken away from it, and the tax breaks itself is known to us, then we’ll know how significant that will impact on our duties and our other trading activities.”
GUTA also indicated that given the signal given by the finance minister to conduct a stakeholder engagement on the VAT reforms, they are ready to offer their ideas and suggestions that will result in mutually beneficial VAT reforms for both the government and the business community.
For now, GUTA says the tax cuts are warmly welcome, but the extent of impact lies in the VAT review.
