Government has been urged to reconsider the new taxes introduced in the 2021 Budget targeted at shoring up revenue to meet expenditure and also reduce the financing gap.
According to Business School Lecturer and Chartered Accountant, Dr. Daniel Seddoh, the challenges with the fiscal economy is due to the unnecessary expenditure and wastage in the system.
Government introduced six new taxes including the 5% Financial Sector Recovery Levy, Increment in Special Petroleum Levy and in VAT Flat Rate Scheme. But Dr. Seddoh who is also a former Chief Executive of the National Pensions Regulatory Authority tells Joy Business the way to go with economic recovery is to focus on production to generate employment.
“Unfortunately, there seems to be a lot of taxes that will not facilitate the kick start we are looking for. And it t will be good to have a rethink about some of those taxes, and make it better for people to get employed and for people to consume, that is giving them disposable income to be able to purchase. It is only when there are purchasing, we can create the demand for the other activities to be generated; and that is when we can kick-start the economy again.”
“The reality is that we’ve hit a bad patch as a people and structurally we have a mechanism that is not functioning. It’s not about NPP being in government but that is what we find ourselves, and if we can dismantle the structures and shift into more production, get people to work and try to be efficient in our expenses”, he emphasized.
“I think that our expenses is much of the problem than the revenue”, Dr. Seddoh explained.
He continued saying “when workers lose jobs, they pay less taxes and when Companies scales down or are making losses, corporate income tax is lost.”
He therefore wants a deliberate expansionary fiscal policy to drive economic growth as job creation gives more people money to spend which boosts growth.
Taxes in 2021 Budget
Tax on betting/gaming
Covid-19 Health Levy of 1% on VAT Flat Rate Scheme and a 1% on National Health Insurance Levy (NHIL)
Energy Sector Recovery Levy of 20 pesewas per litre on fuel.
Review of road tolls
Sanitation and Pollution levy
Financial sector cleanup levy
Suspension of quarterly vehicle income tax during the third and fourth quarters of the year for operators of commercial public transport
Tax rebate of 30% on the income tax due for companies in hotels and restaurants, education, arts and entertainment, and travel and tours for the second, third and fourth quarters of 2021.
Suspension of income tax stamp system for small business
Extension of waivers of interest on accumulated tax arrears