Excess Taxation becoming a Road block to Business Growth in Ghana
Taxation is an essential part of any economy, as it provides the government with the necessary funds to finance public goods and services. However, excessive taxation can become a roadblock to business growth and development. In Ghana, businesses are facing a growing burden of taxes, which is hindering their ability to thrive.
Starting from 2016, the government of Ghana has implemented numerous taxes, including the Special Import Levy, the National Fiscal Stabilization Levy, and the Energy Sector Levy. These taxes have been imposed on various goods and services, including petroleum products, communication services, and luxury vehicles. The government has also increased the Value Added Tax (VAT) rate from 15% to 17.5%, further burdening businesses and consumers.
Additionally, the COVID-19 pandemic has resulted in the introduction of several taxes aimed at addressing the economic impact of the pandemic. These include the COVID-19 Health Recovery Levy, which was introduced in the 2021 budget, and the Ghana COVID-19 Alleviation and Revitalization of Enterprises Support (CARES) program, which imposes a 1% COVID-19 levy on VAT.
Import duties in Ghana are also a significant burden on businesses. The government imposes high import duties on a wide range of goods, including food, clothing, and electronics. These duties increase the cost of imported goods, making them more expensive for consumers and reducing the competitiveness of domestic businesses.
The cumulative effect of these taxes and import duties is a significant burden on businesses in Ghana. Small and medium-sized enterprises, in particular, are struggling to cope with the high cost of doing business, which is affecting their ability to invest, grow, and create jobs.
To address this issue, the government of Ghana should consider reducing the tax burden on businesses. This can be achieved by reviewing and streamlining the tax system to eliminate duplication and simplify compliance. The government should also consider reducing import duties to make imported goods more affordable and support local businesses.
Finally, the government should explore alternative sources of revenue to finance public goods and services. This could include exploring options for public-private partnerships and promoting investment in key sectors of the economy.
While taxation is necessary for the development of any economy, excessive taxation can become a roadblock to business growth and development. In Ghana, the burden of taxes and import duties is hindering the ability of businesses to thrive. The government must take action to reduce this burden and support the growth and development of businesses in the country.
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