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Alcohol Producers Angry   
 
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22-Jul-2009  
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The Association of Alcohol Manufacturers and Importers (AAMI) has learnt with utter dismay Parliament’s speedy and single-handness in passing a bill to impose a five percent National Stabilization Levy on selected business entities in the country.

While no government can be faulted for wanting to achieve such objectives as technical progress, incentives, education, healthcare and infrastructural development, such objectives must be approached with all the circumspection needed in order not to throw an otherwise staggering economy overboard. One would have expected consultations with the relevant business groups the levy was going to affect. At least, that was the approach in many Western countries when financial stimulus packages were being arranged.


While waiting for the global financial difficulties to spit its full venom on Ghana, many of the companies targeted have already frozen employment and are frantically cutting back on their overheads. The intended levy is an additional tax. Taxing net profits is a TAX not a favour. Taxes are supposed to be ploughed back into operations of a company to expand, employ more people and ultimately help expand the income tax net. A direct tax on net profits will ultimately be transferred to consumers. This is the exact opposite of what is being planned in Western countries where government is stimulating demand (with much difficulty as people are still not consuming) with financial packages rather than exacting money from identifiable businesses.


However, we can understand the dilemma the government faces; how to finance these objectives in an equitable manner using non-discriminatory revenue mobilisation tools. Since no tax is a good tax unless it leaves individuals or companies in the same relative position as it finds them, the government could do one of four things: reduce its own expenditure by leaving the private sector to provide some of the services government intends to undertake (many of the companies targeted do these through some of their social responsibility projects); reduce the number of taxes and fees on business and entrepreneurship; bring down business regulatory requirements and bureaucratic work or enhance an efficient tax regime by widening the tax net without necessarily increasing tax rates.


While the latter remains a challenging task, it seems that an incentivised private sector could deliver on the creation of more skilled jobs and a handsome corporate social responsibility package in the provision of basic social services. One such incentive is for the President not to sign the 5% National Stabilization Levy bill into law, but make an appeal to these businesses to help without influencing them under duress.


To the government’s fiscal team and members of parliament, we respectfully entreat you to do more next time and you may be guided by the words of J.R. Mc Culloch, one of the founders of economics, who said: “The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or their property, you are at sea without rudder or compass and there is no amount of injustice and folly you may not commit.”


The Association of Alcohol Manufacturers and Importers (AAMI) has been established by the major producers of alcohol beverages in Ghana, to co-ordinate and direct activities towards the responsible production and use of alcoholic products in Ghana. Current members include, Accra Brewery Ltd, Baron Distilleries,Cape Trading Ltd., Guinness Ghana Brewery Ltd, Kasapreko Company Ltd., West Coast Beverages, Diageo. Website (www.aami.org.gh)
 
 
 
 

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