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The Managing Director of Stanbic Bank Ghana Limited, Mr Alhassan Andani, has prevailed on the government to withdraw the five per cent fiscal stabilisation levy imposed on the pre-tax profits of companies.

He explained that the levy, which was introduced three years ago, had virtually achieved its purpose, having helped stabilise the economy from a fiscal deficit position of 10.1 per cent in 2013 to 5.3 per cent last year.
The levy was one of other revenue generation sources used by the government to correct the fiscal slippages in the economy.

Mr Andani said with the economy now stable and growth resuming, the government needed to remove the levy to help create a more conducive environment for businesses to grow and contribute to greater economic growth.

Speaking in an interview on the sidelines of the one-day breakfast session under the auspices of the Graphic Business and Stanbic Bank in Accra last Tuesday, he said “For me, I think it probably made sense then when the levy was introduced because we all knew that things were not upright and we needed to squeeze for things to stabilise. But since then, things have changed and all the indicators show that the economy is beginning to show positive signs.”

General concern

Mr Andani’s concerns mirror the general sentiments of the business community with regards to the levy.
So far, the Association of Ghana Industries (AGI) and the Ghana Institute of Freight Forwarders (GIFF) have made passionate appeals to the government to remove the levy, which they said was meant to be a temporary measure to help stabilise the economy.

Others have also called on the government to check its expenditure, particularly on highly questionable projects that are either over bloated or not taken through the proper producrement processes to help save cost.
They maintained that as companies sacrificed for the nation it was up to the mansgers of the economy to also play their part to ensure that the money from the toil of companies and taxpayers do not dissipate into a few ‘greedy’ hands.

Correctional tools

Mr Andani’s comments on the levy comes at a time the Income Tax Act, (2015), Act 896, which modernised and consolidated the tax system brought in its wake new levies for businesses and individuals.

Given that the implementation of the Act would help increase government revenue by sapping more revenue from the private sector, the Stanbic Bank MD said “it probably makes sense now” to avoid overburdening businesses.
“We have some new taxes in the system, which are directed at the same private sector. So, if we remove the levy now, it will help the same businesses so that they are not too tight,” he said.

Background

In 2013, the economy was bruised by series of fiscal slippages and expenditures overruns, majority of which resulted from the 2012 general election.
The situation was worsened by the erratic power supply and the slump in commodity prices, which, altogether, led to a contraction of growth in key sectors of the economy.

This prompted the government to introduce what it described as homegrown economic policies, comprising revenue generation initiatives and expenditure cuts.
One of the measures on the revenue side was the fiscal stabilisation levy, which the Minister of Finance, Mr Seth Terkper, said last Tuesday that it had generated about 1.04 per cent of tax revenue in its first year.