Mills Killer Budget
Ghanaians should prepare for harder times in the era of commercial oil production as the Mills administration imposes more taxes for next fiscal year. Presenting the budget in almost two and half hours in Parliament yesterday, Finance Minister Dr. Kwabena Duffuor said government was facing a lot of challenges, compelling it to increase taxes in almost every sector of the economy including churches and mosques that were not taxed but are engaged in commercial activities. “Some institutions enjoy tax-free status because of the original non-profit motive that established them. However, in recent times, some of these institutions have expanded their scope of operation to include commercial activities, thereby making substantive profits but not paying taxes on them. “Government will amend the law to allow the Commissioner-General to tax all commercial activities undertaken by the affected institutions,” the Minister for Finance and Economic Planning stated. The Minority in Parliament immediately christened the 2011 budget statement and economic policy as ‘fear and panic’ budget which would create anxiety in the country’s business community. According to the Minority, the budget contained astronomical increases in taxes which would scare businesses and further worsen the plight of the poor. Dr. Anthony Akoto Osei and Joseph Kofi Adda, Minority spokespersons on Finance and Energy respectively, said President Mills had not kept faith with Ghanaians. However, as a former Minister of state for Finance and Economic Planning, Dr. Akoto Osei indicated that he was not surprised at the increases in taxes because he knew International Monetary Fund (IMF) was going to pressurize government to generate more revenue through taxation to stabilize the economy. The previous New Patriotic Party (NPP) administration, he pointed out, managed to wean itself off the International Monetary Fund because of some these pressures. Kofi Adda said the budget “is a budget that will still leave Ghanaians in another year of bitterness.” He said the Mills administration was providing fewer resources in the budget than that of 2010 for the energy sector, which is supposed to be the driver of the country’s economic growth. Personal income tax, Tema Oil Refinery (TOR) debt recovery levy, airport tax, communications service tax, VAT, property rates, excise duty, vehicle income tax rates, gift tax and withholding tax, would be increased. Government has made proposals in the budget to increase airport tax from $75 to $100, $150 and $200 for economy, business and first-class passengers respectively for international travel; $50 to $60 for regional travel and GH¢1 to GH¢5 for domestic travel. However, the Minister of Finance said the budget, themed ‘Stimulating Growth for Development and Job Creation’, would focus on major growth-oriented programmes and projects that would improve and sustain Ghana’s middle income status. To this end, the Minister said significant investments had been made in the areas of energy, road and rail transport to facilitate private sector expansion for employment generation. “These growth-driven investments would be complemented by social intervention programmes in line with the core values of the NDC in providing equality of opportunities and improvements in the social development of our people,” he assured. The Finance Minister said government would continue with its prudent fiscal and monetary policies to sustain the macroeconomic stability for improved private sector growth, “Which we believe will stimulate employment and improve the quality of life for Ghanaians.” The presidential candidate for the Convention People’s Party (CPP) in the 2008 general elections, Dr. Paa Kwesi Nduom, fears that the budget would worsen the plight of Ghanaians and businesses in the country. Speaking to journalists after the presentation of the budget statement, the former CPP flagbearer said the high level of taxes proposed in the budget was not the way to stimulate economic growth and develop the economy. Government, he suggested, should have identified more properties for taxation as well as widened the tax base instead of increasing taxes for the few who were already overburdened. Dr. Nduom, a former Minister of State in the Kufuor administration, pointed out that with the increases in taxes, businesses would not be able to make the necessary gains that would encourage them to employ more people.
Source: Daily Guide