19th July 2024

Auditing and Accounting firm KPMG believes the introduction of new tax measures and other levies in the 2021 budget statement is part of short term measures to revive the economy.

Doing its analysis on the budget estimates, a Senior Partner at KPMG, Anthony Sarpong, expressed confidence that even though the taxes may bring some hardship to businesses, the government will be quick to withdraw them after a positive pick up in the economy.

He further said that the new measures must be for the short term growth of the economy.

“I believe that we found ourselves in this situation because of the global pandemic [covid-19] and it is just prudent for drastic measures to be taken or hard decisions for the country to move on from the negative effects and so a short term measure is necessary,” Mr Sarpong said.

“I don’t think the new tax measures will travel beyond post COVID-19 economic recovery” he added.

Mr Sarpong said this at a stakeholder engagement on the 2021 budget organised by his outfit.

Necessary evil

He explained that the new taxes are a necessary evil as the government strives to engineer the recovery of the economy following the impact of the COVID-19 pandemic.

Meanwhile, Mr Sarpong has revealed that the GHC100 billion Ghana CARES programme by the government has enough potential to support the growth targets in the 2021 budget.

In her contribution, Economics Lecturer at the University of Ghana, Dr Priscilla Twumasi Baffuor, argued that the new taxes must be invested in profitable infrastructure projects to fasten the growth of the economy post COVID-19.

Joining the conversation virtually, Minister of Finance-designate Ken Ofori-Atta described the move as a shared responsibility for all to contribute in ensuring that uncompleted infrastructure projects are completed.

“Our financial sector also has attacks. All of these associations, somehow, have an impact on revenue collection. There has to be a collective responsibility on that. We have seen the robustness of the sector over the past three or four years, and therefore I’m roping them in on their part as a shared burden philosophy in terms of the way forward,” he indicated

New taxes

New taxes and levies such as the additional 30 pesewas on the price of some petroleum products, the 5 percent financial sector clean-up levy on profit-before-tax of banks to help defray outstanding commitments in the sector, were all introduced in this year’s budget.

The development has received some reaction from stakeholders including the Association of Ghana Industries (AGI) which believes the move will worsen the plight of businesses struggling to recover from the pandemic.

 

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