Research Consultancy Centre of the University of Professional Studies has said the introduction of various levies could have a dire consequence on businesses and individuals and basically on the economy.
According to a statement released by the institute, such levies as the COVID-19 Health Levy, Sanitation and Pollution Levy, Energy Sector Recovery Levy and Financial sector clean up levy will turn against the economy.
“Government is proposing the introduction of a COVID-19 Health Levy of one percentage point increase in the National Health Insurance Levy and one percentage point increase in the VAT Flat Rate. This is going to create more challenges and impact negatively on businesses since the NHIL will be increased from 2.5% to 3.5%, and the VAT Flat Rate from 3% to 4%.
“The seriousness of the impact is the fact that both the NHIL and VAT Flat rate are not recoverable by the taxpayer as a deduction from its output VAT as was the case under the VAT credit system, hence the tendency to pass it on to consumers by way of an increase in price, which may end up impoverishing many. This also has the tendency of promoting tax evasion.
“The government proposes a Sanitation and Pollution Levy (SPL) of 10 pesewas on the price per litre of petrol/diesel under the Energy Sector Levies Act and introduces the Energy Sector Recovery Levy (ESRL) of 20 pesewas.
“The impact of the SPL and ESRL is a proposed 5.7 percent increase in pump prices. The challenge in the implementation of these levies will be whether the government can hold on to it without succumbing to pressures from the impact these taxes will have on consumers as well as on the prices of goods and services.
“A financial sector clean-up levy of 5 percent on profit-before-tax of banks to help defray outstanding commitments in the sector is proposed.
“The challenge with this kind of levy is that in the end, it will be pushed onto the customers of the banks in terms of increase in the percentages charge on loans and other bank services. This is going to affect businesses, individuals and it may even reduce the profit margin of the banks with the accompanying ramifications of laying off workers”
It also pointed out to the fact that the country is likely to incur more debt due to the uncertain state of the pandemic.
“The key issue with the budget for 2021 relates to the shortcomings of Ghana’s expenditure on COVID-19 management. Considering, the uncertainty surrounding Covid-19, financial outlay to deal with this is huge and likely to increase the public debt further.”
“There is high possibility that, Ghana could be in danger of external debt pressure, weakening its debt sustainability status”, it predicted.
Source: opemsuo.com/Hajara Fuseini