A former Finance Minister Dr Kwabena Duffuor has advised the government to focus on stabilizing the economy this year rather than pursuing growth, since the economic fundamentals are weak.
Although he lauded the government’s initiatives introduced in this year’s budget, he said it was necessary for care to be taken in ensuring that the fiscal and the macroeconomic environments were more conducive.
Dr. Duffuor, who is the Founder of policy think tank Institute for Fiscal Studies (IFS), was sharing his views on the 2017 Budget Statement and Economic Policy in an interview with the Daily Graphic.
He was contributing to issues raised at a press briefing organized by the IFS on the 2017 Budget Statement and Economic Policy in Accra.
“We agree that accelerated growth of the economy is critically needed, but that cannot be achieved in adverse fiscal and macroeconomic environments.
“Once the economic fundamentals become stabilized and strong, it is easier to achieve growth. In fact, growth becomes automatic,” he said.
The 2017 Budget
Government has announced major tax cuts in its maiden budget presented to Parliament. The tax cuts are in fulfilment of promises made by the Akufo-Addo-led government ahead of the 2016 elections. In some cases the government has completely abolished some taxes introduced by the previous Mahama administration.
Among the abolished taxes announced Thursday to Parliament by Mr. Ofori Atta are:
• The 1 % Special Import Levy – ABOLISHED
• Kayayei Market Tolls – ABOLISHED
• 17.5 % VAT/NHIL on financial services – ABOLISHED
• 17.5 % VAT/NHIL on selected imported medicines, that are not produced locally – ABOLISHED
• 17.5 % VAT/NHIL on domestic airline tickets – ABOLISHED
• 5 % VAT/NHIL on Real Estate sales – ABOLISHED
• Replaced 17.5% VAT/NHIL with 3 % flat rate for traders
• Tax credits and other incentives for businesses that hire young graduates from tertiary institutions
• Tax Incentives for Young Entrepreneurs
• Duty on imported Spare parts Abolished
• Corporate Income Tax to be progressively reduced from 25% to 20% in 2018
Excise duty on petroleum abolished
Special Petroleum Tax Rates reduced from 17.5% to 15%
National Electrification Levy reduced from 5% to 3%
Public Lighting Levy reduced from 5% to 2%
The tax cuts according to the Finance Minister is expected to bring relief to Ghanaians and help transform the economy.
The government in its 2017 budget also announced 456 million cedis for the fulfilment of its one district-one factory campaign pledge.
The government has also announced a 94 million cedis for the commencement of its one-village one dam campaign pledge expected to take off later this year.