The government of President Nana Addo Dankwa Akufo-Addo has abolished taxes on raw materials to ensure manufacturers are able to stay in business and the 1% market tolls which has existed for several years.
Nana Addo during the electioneering campaign promised to cut down and eliminate some taxes will restore fiscal discipline, promote debt sustainability and support private sector development.
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Reading the maiden 2017 Budget Statement in Parliament on Thursday 2 March, Minister of Finance Ken Ofori-Atta has indicated that said the budget aims at building strong fiscal foundation for the Ghanaian economy.
He said the government will reduce tax exemptions and also broaden the tax base as part of several measures being considered to protect and enhance the public purse.
He said the NPP economic focus is to move away from taxation to production by reducing the corporate tax rate from 25% to 20%
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i. Removing import duties on raw materials and machinery for production within the context of the ECOWAS Common External Tariff (CET) Protocol
ii. Abolishing the Special Import Levy
iii. Abolishing the 17.5% VAT on imported medicines not produced in the country
iv Abolishing the 17.5% VAT on Financial Services
v. Abolishing the 5% VAT on Real Estate sales
vi. Abolishing the 17.5% VAT on domestic airline tickets
vii. Reducing VAT for micro and small enterprises from the current 17.5% to the 3% Flat Rate VAT introduced by the Kufuor-led NPP government
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viii. Introducing tax credits and other incentives for businesses that hire young graduates from tertiary institutions, and
ix. Reviewing withholding taxes imposed on various sectors (including the mining sector) that have constrained the liquidity of many businesses.
He noted that the government will restore fiscal discipline in the Ghanaian economy.
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"The country's debt stock has reached a level of approximately 73 per cent of GDP as at the end of 2016, which is in excess of the debt sustainability threshold of 70 per cent.
"This has resulted in high debt service costs with interest payments alone taking up nearly 42 per cent of tax revenue. This, together with compensation of employees, is more than the total domestic revenue, leaving no fiscal space for growth-enhancing policy programmes and expenditures," Ken Ofori-Atta added.