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23.02.2008 General News

Remove tax moratorium to estate developers - Addo

By Daily Graphic
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A Senior Partner of PricewaterHouse Coopers, Mr Felix Addo, has advocated the removal of' the l0-year tax moratorium granted to real estate developers in the country.

He explained that studies had shown that real estate developers recouped their investments between one and three years; therefore, the incentives to the developers was not necessary.

Mr Addo, who made the suggestion at a business roundtable organised by the Association of Ghana Industries (AGI), admitted that the suggestion was controversial but insisted that it was a fact the nation could not run away from, and noted that more incentives to sectors such as agriculture processing and manufacturing should rather be given greater priority.

The roundtable, which was attended by captains of the econ¬omy and private business owners, was on the theme: "Reforming Ghana's taxation laws and administration for sustained and broad economic growth".

Mr Addo said real estate developers enjoyed tax incentives of up to 10 years because of the notion that the huge investments made in the industry could only be recouped after that period but studies over the years showed otherwise.

Housing has been one of the major bane of the government as many Ghanaians do not have their personal homes and mostly resort to renting at exorbitant rates.

This, among others, compelled the government to give tax incentives to real estate developers to enable them to put up houses at affordable prices to enable more people to buy and also to allow the developers ample time to recoup their investments.

Meanwhile, the situation on the ground suggests that most of the houses the developers claim to be affordable are far beyond the reach of the ordinary worker although most of the houses they put up get fully paid for sometimes even before they are completed.

Mr Addo said the country's economy had reached a stage were there was the need to concentrate more on value addition to pave way for the setting up of manufacturing companies.

He said tax incentives to the manufacturing sector could be of a major benefit to the country as more jobs would be created.

Mr Addo also noted that the imposition of taxes should be carefully done so that it did not become a tax by default.

He said taxes should not burden companies and institutions but should be felt as an onerous obligation to the state and society.

Mrs Susan Himes, an international tax expert, said in coming out with tax incentives, the process needed to be transparent for all to know which categories they fell in and how they could easily access information on it.

She said in coming out with incentives, governments should not look at the size and origins of the companies, their background or ownership structure, since such a move rather made the system discriminatory and ineffective.

Mrs Himes said taxes should not create avenues for companies and the government to argue because that would not be healthy for the economy.

She said in granting tax incentives, there was the need for the government to set a clear and unambiguous goal.

"The government needs to know what the incentives are for so that a critical analysis is required to ensure that the purpose for which the incentives were created are achieved," she added.

Mrs Himes called for a special desk within the Finance Ministry, which should be manned by tax experts to deal with all issues related to taxation in the country.

She debunked the assertion that tax incentive was a way of reducing unemployment, adding that if that was part of a reason incentives were given, then it was a wrong idea.

The President of AGI, Mr Tony Oteng-Gyasi, in his welcoming address said the tax systems in the country needed to be looked at, hence the roundtable for stakeholders and experts to brainstorm to see the way forward.

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