Business News of Sunday, 18 November 2018
Finance Minister, Ken Ofori-Atta, has revealed the review of a 35% personal income tax introduced last July was a difficult decision.
The tax was charged on persons earning GH¢10,000 and above before it was reviewed.
Mr Ofori-Atta explained that the tax was among the important tax policies that were introduced to solve revenue deficit challenges that stifle the growth of the economy.
While presenting the 2019 Budget Statement and Financial Policy on the floor of Parliament on Thursday, Minister announced the review citing concerns by Ghanaians.
Under the new policy, the 35% tax will be charged on persons earning incomes of GH¢20,000 and above.
Speaking on Newsfile, a news analysis programme on Joy FM/MultiTV, Saturday the minister said although the decision has been welcomed by many, it came as a great sacrifice.
“We had a 35% tax [on earners of] GH¢10,000 and after that people felt that it was oppressive so that [review of tax] was a sacrifice which we have done and when you have revenues that are less than your expected expenditure,” he said.
He said the review notwithstanding, government will cut down “certain things to make sure that in the long run, certain macro stabilities are obtained.”
Meanwhile, the Trades Union Congress (TUC) is among the first group to commended the government for reviewing the tax policy.
“In our comment on the mid-year budget review, we described the tax as “too high” and urged government to reconsider it. We are happy to note that government has responded positively to our plea.
“We are aware of the growing shortfalls in tax revenues and the increasing demands on government to provide both economic and social infrastructure and services.
“The minister announced that government has completed a draft policy on tax exemptions which will be presented to Parliament in 2019,” TUC said in a statement on the 2019 budget presented to Parliament on Thursday.
The Minority, however, criticised the revision of the tax policy barely six months after it was introduced.
Minority Spokesperson on Finance, Cassiel Ato Forson, said that the review has been necessitated by their criticisms and not that of Ghanaians as government has suggested.
“I am glad that the Finance minister listened to us. We have said several times the Personal Income Tax that he recently introduced at 35% is regressive and it’s not going to help and for that matter, we asked him to withdraw.
“Yes he has listened to us, and he has withdrawn that. But I want to urge the Finance Minister to listen to us more often. Because often times [for] some of the things that we say, we are not criticising because we are opposition, we are criticising because we think it is wrong. We want Ghana to prosper because if Ghana prospers we all prosper,” he said on Top Story on Joy FM.
He said the quick revision of the tax policy is a testament that it was not well thought through before it was introduced.