Government deciding to abolish and reduce some taxes does not necessarily mean the government is headed for a loss, this is according to the Minister of Information, Mustapha Hamid.
The eloquent academic who was on the Citi Breakfast Show on Tuesday explained to listeners that although the logical perception of tax cut may be loss of revenue, in this case, government will rather be empowering the private sector to expand and employ more Ghanaians.
“On the face of it, when you cut taxes, the understanding is that you are losing revenue, but on the flip side, it means that you will take some financial burden off businesses which then enables them to expand and in expanding they will employ more people. And therefore you are able to solve some of your unemployment problem,” he added.
The Minister of Finance, Ken Ofori-Atta last week read the official budget for 2017 and announced that some taxes considered as “nuisance taxes” such as tax on imported spare parts, as well as market tolls paid by head porters also known as “Kayayei,” will be scrapped.
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Mr. Hamid explained that, the tax cuts will stimulate growth of the Ghanaian economy.
“When the Finance Minister announced the scrapping of taxes on imported spare parts, there was jubilation at Abossey-Okai, and then immediately the leadership of the spare parts dealers at Abossey-Okai said that they themselves were going to go from shop to shop to ensure that every trader in Abossey-Okai was tax compliant, to ensure that they pay their taxes to government.”
“…When that happens, even though you’ve lost some revenue, you will get it back through the commitment of these people who are excited that you have relieved them of some burden.
So cutting taxes may not necessarily mean that you have lost revenue as such because it will stimulate the growth of businesses and therefore help you to employ more people and those people who are employed will also pay taxes. So it is a give and take affair,” he added