Income Tax (Amendment) Bill goes through second reading
Accra (Greater Accra) 24 Feb. 2000
The Customs and Excise (duties and other taxes) Amendment Bill that seeks to rationalise the import and special tax regimes under the Customs Tariff and Harmonised Commodity Code on Wednesday went through a second reading in Parliament.
Under the Bill, import duty rate on specified goods under the custom tariff has been reduced from the existing rate of 25 per cent to 20 per cent.
A special tax has also been slapped on selected commodities while excise duty rates have been reduced on others.
About twenty-six categories of imported commodities that would attract this special tax of twenty per cent include toilet roll, rugs, worn clothing and textile.
Commodities to enjoy the reduction of excise duty rates include locally produced tobacco products, beer, mineral water and soft drinks.
The proposed rate for imported tobacco products moves from 155 per cent of ex-factory price to 140 per cent. Beer moves from 55 per cent to 50 per cent and the rest from 25 to 20.
Under chapter 44 of the Customs Tariff, the existing rate of import duty of 25 per cent on wood in the rough, whether or not stripped of bark has been reduced to zero per cent.
According to a report of the House Finance Committee, the special tax was partially abolished in 1998 by the passage of Act 557 and totally abolished in 1999 by Act 565.
It said the abolition of the special tax adversely affected domestic production as it encouraged the importation of cheap and in some cases, very poor quality goods into the country.
The special tax to be re-imposed on selected goods would encourage the production of local substitutes and reduce the pressure on the demand on the country's foreign exchange resources.
Mr Moses Asaga, a Deputy Minister of Finance, in his introduction said the Bill would encourage the maximisation of value added in domestic natural resource utilisation.
He said in addition to its advantage of harmonising the import duty rate with those applicable in West African Countries to meet the demands of the ECOWAS trade objectives, it would encourage the expansion of local industries with both proven and potential competitiveness.
Mr Asaga said the zero tax on imported round logs is a way of slowing down deforestation and supplementing domestic production of lumber.
Mr Kwadwo Baah-Wiredu, NPP, said it is an indictment on the managers of the nation's economy to see the country come to a stage of the shortage of local wood.
He called on the government to implement prudent anti-bush fire measure to curb the wanton destruction of the nation vegetation.
The member said the confiscated imported second hand vehicles meant for crushing should be given to needy public servants to enhance productivity.
Mr Hackman Owusu Agyeman New Juaben North rejected the bill describing it as " anti-people, anti-worker and anti-progress."
He said the special taxes to be slapped on selected commodities would only protect non-existing industries.
The member said the projected sixty per cent increase in the prices of these goods would further deepen the woes of the ordinary Ghanaian.
He said rise in prices of commodities like imported used clothing and certain detergents would have serious economic consequences for the majority of the people, who cannot afford to patronise new products.
Mr Owusu Agyeman called for a more ingenious and less oppressive way of protecting local industries.
The NPP member for Upper Denkyira, Mr C. O. Nyanor, commended the government
for imposing the special tax since it would protect local industries, saying, local industrialists are suffering because of the influx of cheap imports on the market " that is why I support the bill in toto."
Dr Kwame Addo Kufour, the Minority spokesman on Health, asked the government to use the period for the importation of wood as breathing period to implement a sustainable reforestation programme.
Some members pushed moral arguments against the reduction of rate on beer and tobacco products.
"The reduction of the rate on cigarette to me is unreasonable," Alhaji Yakubu Malik, NPP-Yendi, said, arguing that no amount of money can make up for the harm that cigarette causes to the human body.
The member said Ghana, as a pacesetter in good policies on the African continent, should be seen to be implementing strong anti-smoking laws to cut down on its health bills for others to follow.
Mr Kosi Kedem, NDC-Hohoe South, said the eventual reduction in the prices of beer would increase the indulgence in alcoholism in the country - instead of people working, they will be "quaffing" and over crowding the health facilities at the detriment of productivity.
The member quizzed the Ministry of Finance why an item like ammunitions did not attract the special tax but rather certain edibles.
Mr Kwasi Wiafe Peperah, a Deputy Minister of Trade and Industry said the Association of Ghana Industries and other local Manufacturers contributed significantly to the bill.
He said certain goods produced locally would still have their foreign brands on the market without any condition until the nation develops the capacity to produce the needed quantity.
Mr Moses Asaga said the government has been vindicated by the remarks made by most Minority members in support of the bill.
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Accra (Greater Accra) 24 Feb. 2000
Parliament on Wednesday called for a revision and consolidation of the income tax law to be in consonance with constitutional provisions and reflect the current realities in the country.
The House was of the view that since the Income Tax Decree, SMCD 5 has been amended several times over, the government as a matter of urgency, should expedite
action on the revision and consolidation of the law. This is to give the country an updated income tax law to operate with.
A Deputy Minister of Finance, Mr Moses Asaga made the call during a debate for the second reading of the Income Tax (Amendment) Bill.
The object of the Bill is to amend the Income Tax Decree, 1975 (SMCD five) to provide for separate rates of tax on overtime and bonus earnings of employees and to bring certain provisions in line with the Constitution.
In doing this, the bill seeks among other things, to rectify the tax rate of non-resident individuals to implement the investment incentive package approved by Cabinet.
The package includes the removal of discriminatory provisions in the tax laws, which are at variance with other provisions of the Constitution.
A memorandum accompanying the bill noted that a few weeks ago, Legislative Instrument 1664 of 1999 was laid before the House to give effect to a tripartite committee's recommendation as approved by Cabinet that tax on overtime and bonus
earnings should be reduced to 10 per cent flat.
The memorandum said the implementation of the recommendation would have resulted in employees subject to tax rates of between zero per cent and five per cent paying more tax than before the legislative instrument.
The Bill, therefore, seeks to correct this situation by providing for different rates for different amounts of overtime and bonus earnings.
A clause is introduced in the bill to have a retroactive effect to provide for a reduction in rate of tax, which is beneficial to workers and which has been implemented since July 1999, the memorandum said.
In its report on the Bill, the House Finance Committee said the rationale behind the amendment is to give tax breaks to the overtime earnings of employees.
Accordingly, overtime earnings below 52,000 cedis of employee's monthly salary will attract a tax of 2.5 per cent flat, while overtime earnings in excess of 52,000 cedis, will attract 10 per cent tax.
The reports said any overtime earning in excess of 50 per cent of a worker's monthly salary will attract a rate depending upon the income tax bracket group the worker may find himself or herself.
It said any bonus of not more than 15 per cent of the employee's annual basic salary, is to be taxed at a reduced rate of five per cent while any bonus earning in excess of 15 per cent of annual basic salary will attract tax at the normal rate.
The Committee noted that the current personal income tax schedule is such that when an operative earns an equivalent of approximately 52,000 cedis per month, he enters the threshold of the 10 per cent marginal tax bracket.
It said that if the first 52,000 cedis of overtime payment were taxed at five per cent, workers will not gain because they are currently paying tax on overtime earnings at the rate of five per cent.
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Accra (Greater Accra) 24 Feb. 2000
Mr Steve Akorli, a Deputy Minister of Roads and Transport, told Parliament on Wednesday that roads in all the district capitals have been programmed for engineering studies under the on-going Highway Sector Investment Project.
He said after the studies, the roads would be rehabilitated under a phased programme subject to availability of funds from both local and foreign sources.
Mr Akorli was responding to a question by Mr Kwakye Addo, NDC-Afram Plains North, who wanted to know when roads in Donkorkrom Township would be tarred to benefit the status of a district capital.
The Deputy Minister gave the assurance that in view of the bad nature of the roads, routine maintenance would be undertaken to make them motorable.
Mr Akorli said the eight-kilometre Ankaase-Nsuta-Ninkyininkyi road in the Brong Ahafo Region would be rehabilitated under this year's maintenance programme for spot improvement.
He said the Techimantia-Nyamebeye-Asuboi road, also in the region would, however, be considered in the 2001 programme.
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