We are of the view that even though taxation is a tool used to raise revenue to finance needed developmental projects, when taxes are too high they adversely affect the operations of businesses, leading to evasion in various forms.

And that is why whenever it becomes economically desirable, tax cuts may be resorted to in order to achieve certain economic objectives. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered.

What this means is that even though taxation is important, the lower the tax rates the more willing people will be to comply with their tax obligations, so the end result will be the generation of more revenue for the country.

In fact, complaints by businessmen about high taxes on business operations in Ghana implies that some of the high taxes have had serious, negative impact on the economy in the sense that businesses are not doing well.

It is against this background that the decision by government to abolish the one per cent Special Import Levy and the 17.5 per cent VAT on financial services is seen as appropriate.

Also appropriate are the abolition of the 17.5 per cent VAT on selected imported medicines that are not produced locally and also the introduction of the flat VAT rate scheme of three per cent to replace the existing 17.5 per cent.

What is more, the scraping of 17.5 per cent VAT on financial services and domestic air tickets is very welcome. Again, the abolition of the five per cent VAT on Real Estate sales and excise duty on petroleum; the reduction of the special petroleum tax rate from 17.5 per cent to 15 per cent; and the abolition of duty on the importation of spare parts, among others, are meant to help boost business growth.

We expect that these tax cuts, when approved by Parliament, will reduce the tax load on various businesses to create enough room for businesses to operate more efficiently than they were doing in the past.

Indeed, well-designed tax policies have the potential to raise economic growth, but these must be subjected to certain conditions if they are to help improve economic performance. First of all, tax policies must involve positive incentive in a manner that will encourage work, saving and investment.

Furthermore, they must be oriented towards careful targeting regarding new economic activity rather than providing windfall gains for previous activities.

Besides, they must lead to reductions in distortions across economic sectors and also across different types of income and consumption. Finally, they must also lead to reductions in budget deficit.

We are of the view that the tax cuts are good but that the tax net ought to be widened well enough to cover other individuals and businesses that are left off the tax hook. If this is done well, revenue accruing into the national purse will be increased.

We also wish to stress that a widening of the tax net ought to be done as effectively as possible so as to reduce the tax burden for business organisations in the country to ensure faster business growth.