According to Kojo Oppong Nkrumah, vice chair of the New Patriotic Party’s (NPP) Manifesto Committee, import tariffs will be based on the cedi with a fixed rate beginning in 2025 rather than being linked in dollars.
He said that the new administration led by Dr. Mahamudu Bawumia plans to eliminate dollar-referenced taxes in order to streamline the current tax structure in an interview with Joy News’ PM Express on Monday.
“Because it’s dollar-referenced, it fluctuates. That’s what we are moving away from—being able to give you a simple, basic cedi-based and flat rate,” he explained.
The housing minister outlined the problems that companies have with the current framework, emphasizing that tax fraud is frequently the result of uncertainty and lack of transparency.
“One of the problems with taxation is when people can’t find some clarity and predictability, and therefore resort to a lot more tax evasion, instead of even at best, tax avoidance,” he said.
The NPP discovered that recent changes intended to solve economic issues have made the current taxing system more burdensome during its interactions with the business community.
Oppong Nkrumah presented the NPP’s suggested modifications in response, saying, “Our leader is offering three things. First off, there will be a flat rate of import tariffs based on the cedi, giving you predictability.
“So if you’re bringing in a container of spare parts, you know that a container of spare parts is going to require a duty of GH¢50,000 beforehand.”
He went on to say that the uncertainty businesses have with the current approach—which is based on CIF dollar value—would be eliminated with the new system.
“Today, the system is that it will come in at CIF dollar value, and then they will do the calculations on it. So sometimes you are not sure, and there’s very limited predictability,” Oppong Nkrumah noted.
The MP from Ofoase Ayeribi brought up the argument that because of the dependability of their currency, neighboring Togo—which uses the CFA franc—benefits from greater stability and lower rates.
He maintained that for Ghana to remain competitive, comparable actions must be taken.
Regarding VAT, Oppong Nkrumah stated that Dr. Bawumia intends to streamline the system by combining the current spread into a single level that will be deductible for both input and output.
He made a comparison between Estonia’s flat rate tax system and Ghana’s progressive tax structure.
“In Estonia and a few other countries, they have a flat rate. Your income tax is 15%—there’s no corporate tax. Income tax is maybe 15%, so no matter what you are earning, you have clarity in doing your tax returns.”
In his closing remarks, he said that reducing tax evasion to a single rate may greatly expand the tax base and encourage more people to pay taxes.