The Ghana National Chamber of Commerce and Industry (GNCCI) says it expects a dramatic cut in corporate taxes in this year's budget statement from between 30 and 32 per cent to 25 per cent to enhance the competitiveness of Ghanaian companies on the global market.
According to the chamber,” the current rate of 30-32 per cent is still too high for business in a competitive global economy”.
This was contained in a document issued by the chamber on its expectations from the 2005 national budget.
The chamber said the general cost of doing business in the country was perceived to be too high and suggested that could be reduced by a lower corporate tax regime.
It suggested to the Government to broaden and improve tax collection to rake in more revenue to offset the reduction in corporate taxes.
The chamber called on the Government to put a mechanism in place to ensure that the Common Fund allocation to district assemblies would be based on how much revenue the assemblies generated.
It said it expected the Government to exempt dye stuff, yarn and cotton from taxation to make local companies in the textiles and garments industry competitive.
The chamber further proposed to the Government to scrape or reduce the 2.5 per cent development levy and 7.5 per cent withholding tax to enhance corporate competiveness and cash flow.
On the financial sector, it observed that the disparity between the base and the lending rates were too wide, adding that “this situation makes it difficult for banks to mobilize adequate funds for credit creation”.
The chamber, therefore, recommended that the central bank's intermediary role should be strengthened to enable it to close the gap through direct intervention or by creating incentives for financial institutions to work towards the achievement of that objective.
“There is also the need to institute and enforce policy directives on a low threshold interest rate charge by the banks to assist emerging SMEs to assume a firm position in the industrial sector of the economy”, the chamber said.
It called on the Monetary Policy Committee to pursue a policy that would reduce treasury bill rates to induce financial institutions to do real banking, rather than simply purchasing and selling such bills.
On procurement and market access, it observed that the private sector was keen to see transparency in Government procurement.
The chamber was of the opinion that owing to the keen competition in the international market, Government procurement should not be opened to international competitive bidding.
“Instead, Government procurement must be used to create demand for locally-made products and thus help grow local industries,” the chamber said adding that competitive national bidding will be a better alternative to competitive international bidding”.
The chamber called for what it termed “elements of protection” for the country's industrial sector to support the sector from external competition.
On the telecommunications sector, the chamber said there was the need to further liberalise and open up the sector to external competition to enhance its efficiency.
“There is the need to strengthen the National Telecommunication Authority and its role properly defined,” it said.
On agriculture, it said the President's Special Initiative (PSIs) must be intensified to incorporate more agricultural products in its coverage, adding that “the country will benefit from more value added agricultural production”.
On the Africa Growth and Opportunities Act (AGOA), it suggested that it should be moved from the Government arena and placed under a private sector support organisation to eliminate bureaucracy and the theoretical approach it had been engulfed in.
On Government expenditure, the chamber said it expected the government's budget to work towards either a surplus or balanced budget in order to prevent the country from slipping back into debt.
“It is also time for the national budget to be self-sufficient, instead of always relying on external resources to finance the deficit”, it said.