The Association of Ghana Industries (AGI) has outlined key proposals for the 2025 budget, urging government to prioritise macroeconomic stability, streamline taxes and enhance access to capital to support business growth and facilitate investment planning.
The 2025 budget, set to be presented next month, will be first under the new government. Industry leaders, led by the AGI, are advocating forward-looking tax reforms, forex stability measures and improved access to capital to drive business growth and investment planning.
Speaking at a press briefing on the final day of its National Council retreat in Accra, AGI’s Chief Executive Officer Seth Twum-Akwaboahsaid key indicators of a stable macroeconomic environment, including exchange rate stability, manageable inflation levels and reasonable interest rates, are desired to revitalise the economy.
“We believe that, above all, ensuring a stable macroeconomic environment is crucial. This means maintaining the exchange rate within a reasonable range, stabilising the cedi, keeping inflation at manageable levels and ensuring that interest rates remain affordable,” he said.
He explained that businesses have no control over these factors, making it the responsibility of government and the Bank of Ghana to ensure stability.
Taxation featured prominently in AGI’s budget proposals, with the association highlighting inefficiencies within the VAT system.
The CEO noted that while the zero VAT policy had been applied to test kits and later extended to sanitary products, other critical sectors such as local manufacturing continue to face unfair competition due to smuggling and tax evasion.
“There are a few other products, such as diapers, where we have excess local capacity. But due to unfair competition, people are smuggling these goods, avoiding VAT payments and selling them at lower prices. This makes it difficult for local producers to compete,” Mr. Twum-Akwaboah lamented.
He also emphasised the need to streamline the multiplicity of taxes, noting that imported raw materials are taxed at rates as high as 57 percent, making domestic production costs uncompetitive.
AGI also urged government to ensure that taxes introduced for specific purposes, such as the COVID-19 levy, are abolished once their intended period expires.
“In Ghana, we often see taxes with sunset clauses continuing indefinitely. This creates an additional financial burden on businesses and such taxes must be removed once the stipulated period expires,” Mr. Twum-Akwaboah advocated.
He also indicates that there’s some intentions of government to impose some taxes on the beverage companies, however arguing that if the goal is to curb sugar consumption for health reasons, it should be extended to all sugar-containing products rather than selectively targeTting beverage companies.
Explaining further, he said: “If the intention is to protect public health by reducing sugar intake, then the tax must be extended to all products that contain sugar. Otherwise, it becomes discriminatory”.
AGI also highlighted challenges facing the printing industry – noting that while imported printing materials are taxed, finished imported textbooks remain tax-exempt, making local production uncompetitive.
“The challenge is that when we import raw materials for printing, we pay taxes on them; yet finished, imported textbooks are exempt from taxes,” he said. “This makes importing more cost-effective than local production and we believe it’s a flaw in the law that needs to be addressed.”
For his part, Dr. Humphrey Kwesi Ayim-Darke, President-AGI, stressed the need for energy sector reforms to prevent domestic energy taxation from disproportionately burdening industries.
“We have urged government to implement cross-subsidies in the energy sector, ensuring that domestic taxation on energy bills is rationalised to enhance industrial competitiveness,” he said.
Dr. Ayim-Darke also highlighted other concerns, stating: “Currently, government is in the market borrowing through T-bills. This has made access to capital for SMEs and various businesses challenging and it’s something government must address carefully”.
He further stressed the importance of embracing digital transformation to enhance tax collection efficiency and create a more streamlined economic system.
Regarding government’s directive to cut expenditure, he recommended that the reductions be strategically targetted to create opportunities for private sector investment in key areas.
“While expenditure cuts may be necessary, they should focus on sectors where the private sector can invest to complement government efforts,” he said.
“The rural-to-urban shift brings further pressures on urban infrastructure and government alone cannot address these challenges. The finance minister should consider expenditure cuts in areas that create opportunities for private sector participation,” he added.
The retreat, attended by over 60 industry leaders and representatives from 25 sectors, was held under the theme ‘Resuscitating industry to spur growth, fiscal balance and job creation’. It focused on key challenges affecting local manufacturing, including tax policies, forex instability and trade regulations.
thebftonline.com
