“Recent developments indicate that we cannot take the enabling environment for granted.
Future growth of the stock exchange will require macroeconomic stability and a robust regulatory framework,” said Sam Mensah, chairman of the governing council of the Ghana Stock Exchange (GSE).
Delivering the 25th anniversary lectures of the GSE, Mensah observed that high interest rates had dealt a big blow to the equity market as investible funds had been moved out of the stock markets to alternative instruments such as the fixed income deposits and non-bank financial institutions.
The government introduced a capital gains tax of 15 percent on local investors and 20 percent on foreign investors on all forms of investment in the country.
In addition, there was the imposition of a one percent income tax on dividends from all banking and financial transactions.
Stakeholders argued that these new revenue mobilization measures are inimical to the capital market and will eventually hurt the economy in general.
“The GSE, as we see it today, is really a development partner with government. Unfortunately, recent developments indicate that we cannot take government support for grated,” said the chairman.
He described as unfortunate the abolition of the three percent rebate on income taxes for listed companies during their first three years of listing, as well as the abolition of tax exemptions of capital gains, exemption of mutual funds and unit trust from taxes and tax exemptions for the GSE.
Abena Amoah, an investment banker, expressed worries about the inclusion of the capital market in the Capital Gains Tax in the new Income Tax Law.
She wondered why government was bringing that tax at a time close neighbors like Nigeria had removed the Capital Gains Tax on investments on their exchange.
“This will only drive investments away elsewhere and I don’t think this is what the government wants to see,” said Amoah.
However, Deputy Minister for Finance Mona Quartey indicated that the government would consider the pleas of the capital market players and ensure that the fiscal and regulatory environment benefited investments.
“The twin deficits we are confronted with demands that we take some drastic measures in raising revenue to seal the loopholes in revenue, which will definitely affect some sectors,” said Quartey. Enditem