Private Enterprise Federation wants government to halt implementation of new tax hikes. This is one of the conclusions reached at an emergency meeting by the governing council of the Federation. According them, these taxes if implemented would not help businesses. "The Council is of the view that the levies increase the cost of doing business and negatively affect the operations of businesses, as they reduce the amount of returns to finance business expansion and create jobs." Below is a statement from the private enterprises federation COMMENTARY ON THE NATIONAL FISCAL STABILISATIONTION LEVY, COMMUNICATIONS SERVICE TAX, SPECIAL IMPORT LEVY, CUSTOMS AND EXCISE AMENDMENT & PRIVATE SECTOR BUSINESSES In May 2013, the Government of Ghana put forward a proposal to impose a short-term additional tax on the profit of businesses as fiscal stabilization levy. Since then, not only has that levy crystallized into a Bill, but also a plethora of other tax Bills were added and passed by Parliament under Certificate of Urgency without any consultations with the private sector. These new tax hikes will effectively increase the corporate tax rate for businesses and seriously reduce the ability of businesses to raise internally generated income for expansion. It would be recalled that similar levies were imposed in 2001 and 2009: the National Reconstruction Levy under Act 619 on financial institutions, mining telecommunication, brewery and the major manufacturing companies; and the National Fiscal Stabilization Levy under Act 785 on firms including financial institutions, communication, mining, and brewery companies. These levies were later abolished following complaints from the private sector. The Private Enterprise Federation has been at the forefront in expressing to Government the reservations of the private sector on the levies. After an Emergency meeting of the Governing Council of the Federation held on Monday July 8th 2013, the Council is of the view that the levies increase the cost of doing business and negatively affect the operations of businesses, as they reduce the amount of returns to finance business expansion and create jobs. The Federation recognizes that Government faces serious financing gap and, therefore, needs to raise additional revenue to fund its programs. However, the Governing Council’s position is that over-taxing a few select industries is not a sustainable way by Government to meet its revenue shortfall. What Government needs to do in our view, is to ensure that every economic agent, irrespective of size, pays its fair share of taxes. The Government as a matter of urgency should review the various tax exemptions and free zone tax holidays that have been granted over the years—some of which may have since expired—to ascertain compliance, relevance, and efficacy. There are other ways to rope into the tax net other economic activities without hiking the tax rate for businesses that have continuously honoured their tax obligations to the fullest. Indeed, several studies have concluded that high taxes on business in the long-run result in a shrinkage of the economy, less investment, fewer jobs, and lower wages and, ironically, lower tax revenues to government itself. These reductions have been estimated to outweigh the additional benefits as a result of increased government spending financed by the higher taxes. Most importantly, Government should prioritize its expenditure and only undertake projects that are critical for the growth of the economy at this period where its finances are in critical short supply. The Government cannot and should not continue to embark on projects basically because they have been approved in the Budget. It cannot continue to tax and spend. This is a period of critical shortfalls where economic gains accrued over the years may unravel if we continue on this incessant tax hikes. It is the opinion of the Council that the effort to increase tax revenues can be enhanced in an atmosphere of adequate discussions and consultations with the business community to explore viable ways to achieve this objective without killing the very same businesses that constitute the major sources of Government revenues. Already, businesses are feeling a dramatic financial crunch as a consequence of continuous power outages, water shortages and high cost of funds among other constraints that have started to affect their ability to keep current employment levels. The Governing Council is therefore requesting the Government to first HOLD OFF IMPLEMNTATION OF THE NEW TAX HIKES. Secondly, to immediately convene a dialogue meeting with the leadership of the following groups GOVERNMENT, PARLIAMENT (BOTH SIDES OF THE AISLE) PRIVATE SECTOR, 4 TOP BUSINESS SCHOOLS, ECONOMIC THINK TANKS and TUC to review all options including of course taxes, to raise Government revenues to enable it execute the projects that can result in business expansion, jobs creation and growth of the economy