-As Ghanaians Prepare For Economic Squeeze
Almost every sector of the Ghanaian economy are set for significant hardships as the Akufo Addo administration introduces new controversial taxes while increasing some existing ones
For instance, the government has Government is introducing a so-called Covid-19 Health Levy which will automatically increase Value Added Tax (VAT) by 1% and an additional 1% on Flat Rate Scheme (VFRS) and a 1% on National Health Insurance Levy (NHIL).
Other levies and taxes include increases in Road, taxes on the gaming industry, taxes on Sanitation services in what is called Pollution Levy or “Borla Tax”.
The financial sector is going to experience more pressure on their services and the costs would be transferred to customers because the Akufo Addo administration has slapped a 5% on Banks and other financial services, calling it the Financial Sector Clean-up levy.
In the budget statement presented by the Minister of Parliamentary Affairs, Osei Kyei Mensah-Bonsu on behalf of the indisposed Finance Minister-Designate, Ken Ofori-Atta, the government has also slapped a 20 pesewas levy on The Energy Sector Recovery Levy (ESLA) which means every car owner will be forced to pay an extra 20 pesewas per litre of petrol/diesel the buy at the pumps.
Critics think this will mean an automatic rise in the cost of transportation and consequently a rise in the cost of goods and services whose nerve centre revolves around road transportation.
The government claims this is part of revenue measures to help the economy recover.
For instance, the COVID-Levy, Mensah-Bonsu said would be used to “assist in the construction of 33 major health projects, the recruitment of more health professionals and agenda 111,” which is an ambitious plan by the administration to construct 100-bed capacity district hospitals in 111 districts with no hospitals.
According to Mr Kyei-Mensah-Bonsu, the 2021 budget will ensure economic recovery and macroeconomic stability through the rolling out of well-thought-through measures that will set the economy back in motion.
He explained that the COVID-19 pandemic has devastated a lot of economies around the world, Ghana inclusive, adding that the unexpected turn of events required swift action to ameliorate the negative impact of the pandemic on livelihoods.
“Under President Akufo-Addo’s leadership, we took the required swift, drastic and decisive measures to mitigate the spread of the pandemic. We rapidly mobilised and deployed extensive internal and external resources to support Ghanaian households and enterprises”.
“Mr Speaker, we are now better positioned to recover and build back a more resilient economy not only because we know how to do it but also because the grace of God has been assured for this journey,” he said.
Meanwhile, in an attempt to defray the economic hardships that will accompany the new tax introductions, the government has thrown in some tokens seeking to appease the populace, including tax waivers on income taxes for commercial vehicle drivers.
The government also gave a temporary 30% tax rebate to companies in hotels and restaurants, education, arts and entertainment, and travel and tours. They are only to enjoy this waiver till the close of 2021.
According to the government, these sectors have been the hardest hit during the COVID-19 pandemic.
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