By Patrick Ofoe Nudzi
Accra, May 28, GNA – Businesses are likely to experience increased cost of production as the IMF conditionalities prohibit tax exemption and phases out tax holidays.
Rev Dr Samuel Worlanyo Mensah, Economist and Executive Director, Centre for Greater Impact Africa, said the $3 billion loan-support secured from the International Monetary Fund (IMF) came with conditions, including removal of value added tax exemptions.
Others were the reformation of corporate income tax by phasing out tax holidays and exemptions, reducing Customs exemptions and quarterly tariff adjustment including electricity and water.
Speaking in an interview with the Ghana News (GNA), Rev Dr Worlanyo Mensah, said companies who had been given some number of years to operate without paying taxes could have the exemptions reversed or the duration reduced.
He said such actions would affect the balance sheets of most of the companies that had signed into the exemption agreement.
“The industries should get prepared especially those enjoying this level of tax exemptions. The moment there’s a review on these taxes it will definitely increase the cost of production and cost of doing business,” he said.
The Executive Director said most organisations had not prepared for such eventualities and cut down or downsize their labour force whilst some reduce their workers’ remuneration.
“Laying workers off will affect livelihoods, it is gong to affect cost of living and reduce standard of living. It is going to be a tough time for individuals and the State,” he said.
Rev Dr Worlanyo Mensah said the removal of the exemption together with reformation of corporate income tax would affect the unit cost of products, thus, consumers would see increment in prices of goods.
He said Government in reforming the corporate income tax would review withholding tax upwards and once government did that it would reduce the operational capital of organisations and by far affect productivity.
“Exemptions on certain goods that we import like the toiletries, sanitary pads are likely to be taken off and the implication is that we are likely to pay more for such products on the market,” the Economist said.
He said Government might include some more commodities, especially those that had comparative advantage if produced in Ghana to protect infant industries and the market.
GNA