Business captains have urged government to implement policies outlined in its manifesto to stimulate the services sector and the country’s economy in general.
The business leaders made the suggestion in a 2019 KPMG pre-budget survey report.
According to them, since the leading growth sector of Ghana’s economy is the services sector, government should focus on those policies because all leading economies in the world provide citizens with access to their basic needs by modernizing agriculture, industrializing and expanding the services sector.
KPMG, in August and September 2018, surveyed 40 business leaders from various sectors of the economy for their perceptions of the business environment and the fiscal regimes that affect their businesses.
The sectors included construction, financial services, hospitality, manufacturing, mining and petroleum, pharmaceuticals, retail, transport and logistics, technology.
Other multinationals, local companies and small to medium sized enterprises were also surveyed.
The findings are expected to help government with its deliberations and provide valuable feedback in the lead-up to the 2019 Budget.
“Government should introduce policies, which make corruption unattractive since corruption impacts negatively on all spheres of development. Our educational system should be re-looked at to make it relevant to the economy, they indicated.
Forty-three percent of respondents felt the 100% tax deduction on Research & Development cost in the year of occurrence had no impact at all on their business.
Fourteen percent of the respondents were from the banking sector while 42 percent of respondents also felt the increase in the thin capitalisation ratio from 2:1 to 3:1 had a moderately significant impact on their business.
Respondents indicated that the high cost of obtaining funds prohibited them from pursuing additional leverage.
Also, 58 percent of respondents stated that the 3 & 5 year carry forward of tax losses for businesses had a significant positive impact on their business while 57 percent felt the income tax exemption for enterprises owned by persons under 35 years for the first 5 years and also the 5-year tax loss carry forward had no significant impact on their business.
Forty percent of respondents revealed that they were significantly impacted by the reduction in VAT/NHIL Input rate from 17.5% to 12.5%.
Analysis of survey responses provided evidence for a largely negative view of the VAT/NHIL input rate reduction, with businesses stressing that it added to their cost of production.
Fifty-three percent of respondents indicated the introduction of the 5 percent GETFund and NHIL significantly impacted their operations.
There was also general feeling the taxpayers were overburdened and as such the added levy was regressive in nature.
Fifty percent cited little to no significant impact on their business from the Government’s Tax Amnesty fiscal measure.
Touching on fiscal measures that had the most impact on their business, 64 percent cited little to no significant impact from the Excise Stamp Tax policy, while 53 percent cited little to no significant impact on their business operating costs after the removal of the Special Import Levy, with 46 percent of respondents indicating they felt little to no impact on their business from the 3 percent flat VAT rate.