The move is expected to spur on growth and provide adequate incentives for the private sector to thrive.

The Senior Minister, Mr Yaw Osafo Maafo, said at the Graphic Business/Stanbic Bank breakfast meeting in Accra on Tuesday, that the government would shift its economic policy away from taxation to production by reducing the corporate tax rate from 25 per cent to 20 per cent.

Other taxes that will be abolished include the Special Import Levy and the 17.5 per cent VAT on imported medicines not produced in the country.

Mr Osafo Maafo said the government would announce further tax measures including the scrapping of the 17.5 per cent on financial services and five per cent on VAT on Real Estate sales when the 2017 budget is unveiled next month.

Annual turnovers

Under the Vat Flat Rate Scheme, retailers with annual turnovers of between GH¢100 million and GH¢1.2 billion are expected to pay three per cent of their turnovers as Value Added Tax.

The International Monetary Fund (IMF) is confident that the plans outlined by the New Patriotic Party (NPP) government to cut down and eliminate some taxes will restore fiscal discipline, promote debt sustainability and support private sector development. The fund argues that such decisions should also help reduce the large fiscal slippages observed last year.

The Graphic Business/Stanbic Bank breakfast meeting, which was on the theme, “A Public-Private dialogue on stability, growth and jobs,” was to stimulate discussions on the opportunities for growth and boost employment opportunities.

GUTA’s concerns

 Already, the Ghana Union of Traders Association (GUTA) has underscored the need for the new government to quickly move to tackle the association’s concerns in order to safeguard local businesses.

Some of the issues GUTA wants the NPP government to act on include tax stamp, 3 per cent flat VAT rate and the ECOWAS Common External Tariff as well as the influx of foreigners on the country’s retail market.

The three per cent flat vat rate which became 17.5 per cent was reverted by government due to GUTA’s insistent calls to shed off some tax load on industry players.

According to GUTA, though prior to the elections they met with the NPP and discussed their concerns which saw most captured in the party’s manifesto, it was imperative that the Nana Akufo Addo led – administration acted quick to save the ailing trading market.

The Association of Ghana Industries (AGI) and the Private Enterprise Federation have often complained about the numerous taxes in the system, saying it is stalling the growth of businesses.

Proponents of tax cuts point to the effects that lower taxes have on incentives to work, to save, and to invest, and argue that reducing tax rates will boost economic growth.

But critics have questioned the lack of industry specific details in the proposals to cut taxes.  Currently, there are sectors that enjoy lower tax rates than the 25 per cent, such as hotels, financial institutions and companies listed on the stock exchange, for instance.