The Association of Ghana Industries (AGI) has described the introduction of new tax handles and the addition of 2.5% on Value Added Tax (VAT) as a distortion to manufacturing sector growth.
Finance Minister, Ken Ofori Atta, is seeking parliamentary approval to increase VAT by 2.5% from 2023..
But AGI says its recommendations to government was to eliminate VAT from pre-production levels in order to help the manufacturing sector thrive.
President of AGI, Dr. Humphery Ayim Darke was speaking at a Post Budget Forum organised by auditing and accounting firm, KPMG.
“We made a suggestion to the government to look at taking off these VAT handles including Health Insurance Levy from the pre-production level so that they are rather taxed on finished goods. Because you can’t be taxing our raw materials and also tax the main products…that we find as a distortion to the growth of the manufacturing sector”.
“However, we agree that we’re not in normal times and the need to support government in a way to get some revenue to be able to take the economy out of the crises. So we shall continue to engage and see how this will go”, he told Joy Business.
Meanwhile, the Head of Advisory and Markets at KPMG, Andrew Akoto has reiterated the call for government to have a broader consultation with stakeholders to ensure a successful implementation of the programmes and policies in the budget.
According to him, the only way for government to succeed with the new measures in the budget is to get the understanding of every stakeholder and seek their support.
“We are advocating for a multi-stakeholder engagement on the implementation of the various policies in the 2023 budget because when you look at most of the proposals in the budget statement, government will not be able to achieve them alone without the involvement of stakeholders from both sides of the political aisle”.
“We believe that’s the way to go in order to overcome the crises”, he said.
The auditing and accounting firm believes that the introduction of some new tax handles and the increase in VAT has become a necessary evil that could support the government’s revenue mobilization drive.