TERKPER IS HOT OVER PENSION TAX

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Friday, June 3, 2016

Finance Minister Seth Terkper’s decision to extend his insatiable appetite for imposing taxes has incurred the wrath of his fellow National Democratic Congress (NDC) members who are calling for his head.

Ghanaians expressed resentment against the government this week when Mr Terkper announced that it (government) was going to impose more taxes on the already stretched taxpayer.

According to the minister, the new policy is inspired by the New Income Tax Act (2015), which was introduced recently and intended to tax workers’ allowances, salaries and pension funds.

By the foregoing, workers who want to withdraw any of their pension contributions before they are due for retirement will be taxed a whopping 15 percent.

This latest decision, in the name of widening the tax net, was received with apprehension by pensioners, who vehemently opposed the new arrangement, saying it would reduce their already scanty pension benefits which have also been negatively affected by inflation.

The NDC government will stop at nothing to introduce more taxes to address the fiscal and macro-economic challenges and offset the huge debt, judging from Mr Terkper’s posture.

Sensing the possible repercussion of further imposition of taxes on the over-stretched Ghanaian, President John Mahama, who was visiting Cote d’Ivoire, quickly took to Twitter to douse the raging tension instigated by Terkper’s proposed taxes. “Government has no intention of introducing new taxes,” the president said.

Widening Tax Net

Under the guise of simply proposing reforms to the present tax regime and widening the tax net to increase the number of people who pay tax, the minister indicated that Ghanaians should be prepared to pay more taxes if they really want to access civilisation as has happened in other parts of the world.

Speaking at the Graphic Business/ Stanbic Bank Breakfast meeting themed, ‘The New Tax Law and Its Implications for the Economy and Businesses’ on Tuesday, Mr Terkper stressed that no corrections could be made to a country’s fiscal and macro-economic challenges without depending on taxes.

 According to the minister, the new tax law had become necessary because some taxpayers were either avoiding or evading tax by hiding their incomes in areas which were previously not taxed.

Under the new Act, taxes on employee allowances such as clothing as well as on retiring benefits will attract a 20 per cent tax.

“Yes, allowances must be taxed. Allowances are incomes… The issue, I know, is a very difficult one; it’s about taxing income and if you do not define income broadly, you will have taxpayers either through avoidance or ... hiding the income in areas which are not taxed,” Terkper said.

NDC Anger

But a Deputy General Secretary of the NDC, Koku Anyidoho, who has suddenly turned himself into a headmaster in the governing party, lambasted Terkper, accusing him of sending the ruling party to opposition with his stringent policies.

“The NDC party will not sit down again,” repeating severally, “The NDC party we are tired, yabrƐ…; we will not sit down again… No individual minister will walk us into opposition; no individual minister will walk us into opposition. It will not happen; it cannot happen…,”he told a pro-NDC radio station in Accra.

He did not understand why the government had to deploy all tax tools at a go when it could be rolled out in phases to afford the taxpayer some breathing space, and said the current tax regime is overburdening Ghanaians.

Tax On Air

New Patriotic Party (NPP) vice presidential candidate, Dr Mahamudu Bawumia, has shredded the NDC government’s tax policy, saying the government would have taxed the air that people breathe if it had the chance.

“Anything they think they can impose taxes on, they are imposing taxes on it – even if they think they could impose taxes on the air we breathe today, they would have imposed taxes on it," he said in the Volta Region.

Condom Tax

Interacting with students and lecturers of the E.P. College of Education, Amedzofe, as part of his campaign tour of the region on Wednesday, Dr Bawumia, a respected economist, said: “In their desperation to fill the hole they have dug, the government imposed taxes on condoms, cutlasses, savings; today they are imposing taxes on pensions and allowances.”

He reiterated the NPP’s commitment to building what he called “a people and business-friendly economy” when Ghanaians bring it to power in November.

“This means that job creation will be at the heart of economic policy. A lot of the other taxes we are seeing today will be scrapped. We will reduce the tax burden on our people and businesses so that they can employ more people and introduce a Tax Credit scheme for companies that employ fresh graduates so that we will increase the employment of fresh graduates.”

NDC Incompetence

Dr Bawumia insisted that the current poor economic outlook was due to the government’s mismanagement, corruption and incompetence and that in its desperate bid to find a way out, the government had resorted to imprudently imposing taxes on every conceivable item.