As Ghana looks to develop its business environment as a driver of economic growth, restrictive tax policies might be the biggest hindrance to growth for businesses in the country, according to Kofi Frempong-Kore a Tax Partner at global professional services firm KPMG in Ghana.
Frempong-Kore was speaking at a meeting in the Ghanaian-German Economic Association in Accra late last month, and argued that the current revenue policies might be hindering the government’s policy objectives rather than facilitating progress therein. THe GETFund, NHIL Levys and the Luxury Vehicle Levy are among the policies he denounces.
Ghana’s revenue policy has been the matter of much debate in recent times, given that the Ghana Revenue Authority found a deficit of nearly $400 million in between its expected level of revenue collection and the actual funds collected. McKinsey & Company has been helping the organisation with solving these issues.
According to Frempong-Kore, the government must focus its energy on promoting overall economic growth in the country, which is currently being slowed down due to considerably high costs of doing business brought about by policies such as the decoupling of the GETFund and NHIL Levy from VAT.
“Some businesses are still struggling to adapt their systems to cater for the change against the backdrop of the cost of implementation. Cost of living has increased for the average Ghanaian as the change in the law has brought about increase in the cost of goods and services,” he said.
The luxury tax is another area in which the KPMG Ghana Tax Partner identified problems, particularly as they hinder growth in what is perhaps one of Ghana’s most lucrative sectors – that of luxury hospitality. The country currently accounts for the largest share of leisure tourism on the continent.
The transport sector – closely linked to the hospitality and tourism sectors – has also taken a hit from the luxury tax. “This cost has consequently been passed on to consumers. Individuals are likely to use the services of unregistered transport businesses as their cost is expected to be cheaper,” said Frempong-Kore.