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16 June 2016

GAWU urges government to withdraw tax on rural agriculture

taxThe General Agricultural Workers Union (GAWU), says the Government’s policy shift from a zero-related tax of plantations and agro-processing companies located in rural Ghana to 12.5 per cent tax is inappropriate.

GAWA, therefore, said for the immediate to near-term sustainability of these businesses, the government should withdraw the newly-introduce corporate tax on rural agriculture.

GAWU said that the policy, which was introduced by the Government this year, had rather ended the policy of discriminating in favour of rural investment and it was bound to have adverse impacts on rural agriculture and livelihoods.

A statement copied to the GNA, and signed by Mr Kingsley Ofei-Nkansah, the General Secretary of GAWU, said the current economic situation in Ghana, where businesses were just about recovering from the effects of the energy crisis made additional taxes unwarranted and counterproductive.

GAWU stated: “Besides, the timing is wrong. Currently, businesses that invested in the plantations are reeling from the effects of harsh global conditions characterised by falling demand and prices for agricultural commodities. This is not the time to impose taxes on them.

A farmer spreads rice to dry in the sun in Afife. Gadco’s smallholder scheme could help secure Ghana“Plantation in agriculture, in particular, is not only capital intensive but also requires ‘patient capital’ because the gestation period is long. That makes this kind of investment unattractive to many investors.

“Government support is crucial to attract and retain such investments. In the present circumstance, the best and the least the government can do, is to maintain the status quo by restoring zero-rated tax regime.”

“The soaring energy costs occasioned by high taxes on electricity have already thrown the recovery plans of agric-businesses into disarray”.

The release explained that for many years, various governments had attempted to transform rural agriculture and agro processing, and the livelihoods of the many Ghanaians who depended on the sector by granting tax exemptions to investors who resided outside the regions of businesses.

This policy, GAWU said, had helped to attract sizeable investments into rural agriculture and offered relatively decent employment to many people, including young women and men who otherwise would have migrated into the congested urban Ghana in search of elusive jobs.

agriculture2It said since Agriculture remained the dominant economic activity in rural Ghana and employed more than 70 per cent of the rural workforce.

Consequently, it said, there was the need to attract and retain sustainable investments into rural agriculture.

However, GWAU said for many reasons rural agriculture had been less productive and farmers continued to earn low incomes, making them the most affected by poverty.

“Additionally, Climate Change is now taking its toll on agriculture in diverse ways,” GAWU said.

It said Agric-businesses in Ghana had to spend additional resources to address the impact of Climate Change to survive.

Expansion, GAWU said, had become difficult, while new investment into rural agriculture was not forthcoming because the challenges of rural agriculture that warranted tax concessions had remained unresolved.
“Businesses in agriculture have to borrow at more than twice the interest rate paid by their counterparts in import trade,” it said.

“These and other reasons have led to a situation where Ghanaian agriculture is on the decline. In the last few years, agricultural growth has been below overall national growth.

In 2015, agriculture barely grew, registering a mere 0.04 percent growth.  There are already strong indications that businesses with massive investment in rural agriculture and agro-processing are re-thinking their investment models.

agriculture3“And the thinking is in the direction of dis-investments, the consequences can be catastrophic for rural employment and livelihoods.

“Certainly, this is not the time to pile up taxes on agriculture and the struggling businesses in there. Surely, a time will come for a review of the zero-rated tax regime for rural agriculture and agro-processing. We are not there yet. There is still strong justification for zero-rate tax for rural plantations and agro-processing”.

GAWU explained that one of Ghana’s leading oil palm plantations, Benso Oil Palm Plantation, which is listed on the GSE, paid a total of GH¢ 17 million to outgrower and smallholder farmers within the Central and Western Regions in 2015.

Other companies like GOPDC, TOPP, NORPALM, were also paying the same or more to their outgrowers and smallholder farmers within the Eastern, Central and Western regions.

Source: GNA

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