KPMG BUDGET FORUM: AGI calls on Government to reconsider new levies

Date: 2021-03-19

The Association of Ghana Industries has called on Government to review new levies introduced in the 2021 National budget. According to Seth Twum-Akwaboah, CEO of the Association, even though he acknowledged there was the need to increase government revenue, the Health levy which increases the National Health Insurance and VAT flat rate by 1% is a huge disincentive to industry. He mentioned that in its current state, the levies were going to increase the cost of production since the NHIL cannot be recovered back. This, he admitted that the decoupling of the VAT and NHIL had its own challenge when it was initially introduced, hence increasing it only made the situation worse. He advised that it would have been prudent for the Finance Ministry to rather increase VAT in general so that manufactures could reclaim the input VAT amount. As it is, for companies whose product are price-sensitive, this will add up to their cost build up and they will suffer more in a period when they need the most help.

Mr Twum-Akwaboah also commented on the 5% financial sector levy and advised if the levy could be spread across other productive sectors to lessen the burden on only one sector. He mentioned that within this recovery process, the industry needed banks support but such a levy was counterproductive and therefore will only increase the already high cost of credit in the country. He reiterated that apart from the effect of COVID, the industry also had AfCFTA to deal with hence liquidity within this period was very crucial.

Speaking at this year’s KPMG Budget Forum at the Marriot Hotel on Tuesday, March 16, 2021, Mr Twum Akwaboah asked the Finance Ministry to further engage all relevant stakeholders to ensure that the budget brings out workable solutions to our challenges. He, however, commended Government for the relative stability in the microeconomics indicators and welcomed the proposed CARES program.