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30.11.2011 Business & Finance

AGI calls on government to reconsider Six per cent Flat rate tax

By GNA
AGI calls on government to reconsider Six per cent Flat rate tax
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Accra , Nov. 30, GNA - The Association of Ghana Industries (AGI) has asked the Government to reconsider the six per cent flat rate tax imposed on Small and Medium scale enterprises because it would place a huge tax burden on such businesses.

The companies were hitherto paying 3 per cent flat rate tax.

In its comment on the 2012 Budget statement, the AGI also described as inadequate the 5 million Ghana cedis and 2 million Ghana cedis allocation to the Venture Capital fund and Exim Guarantee Company respectively.

However, the Association commended the Government on the prudent management of the economy and the primary objective of the 2012 Budget's focus on infrastructural development.

“It is our hope that, all hands will be put on deck to let us realize the objective to help us reduce the cost of doing business in the country,” Nana Owusu-Afari, Presidentof AGI, told journalists at a press conference.

Nana Owusu-Afari said the AGI also welcomed the policy initiatives proposed to enhance the competitiveness of the private sector and to stimulate wealth and job creation.

Some of these policies included the support to the Ghana Stock Exchange to create an alternative market where simplified rules would allow SMEs to list to improve access to finance the Public-Private Partnership aims to accelerate delivery of infrastructure and public services and the development of a local content policy for every sector of the economy.

“Huge opportunities exist in local procurement for the growth and development of local companies and businesses. Therefore, AGI is happy that the Government is committed to developing a local content policy for the whole economy,” Nana Owusu-Afari said.

He expressed the hope that the private sector would be given ample opportunity to fully access opportunities under the policies proposed in the 2012 Budget.

The Association also touched on high lending rates for SMEs and said it was contributing to the high cost of doing business, saying it was eager to see the work of the working group on interest rates translated into a real reduction in lending rates.

Nana Owusu-Afari urged the Government to work with the Bank of Ghana to ensure that the reduction in the policy rate and stability of inflation led to a reduction in the interest rate so as to enhance access of the business community to capital.

There is also the need to tackle proper house numbering and the credit referencing system to help reduce the loss provision of banks and bring down interest rates.

Nana Owusu-Afari also called for a discrimatory tax incentive to encourage employers who increase number of staff and pay the relevant tax and social security contributions to enjoy better corporate tax incentives.

The AGI expressed concern about poor growth rates in the manufacturing sub-sector, which had recorded average of 0.5 percent over the last three years.

Industry is projected to grow to 36.2 per cent in 2011, boosted by mining, oil and gold but Nana Owusu-Afari said the sector did not employ as many people as the manufacturing sector.

“The budget on the whole has a positive outlook and the AGI is looking forward to working with the Government and relevant NMDAs in the spirit of public-private partnership,” he added.

GNA

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