KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY,

KUMASI

INSTITUTE OF DISTANCE LEARNING

PROGRAMME: MSC ACCOUNTING AND FINANCE

COURSE: TAXATION AND BUSINESS STRATEG

ASSIGNMENT ONE

NAME: EFFAH EUNICE

INDEX NUMBER: PG4643120

STUDENT I D NO: 20750189

 QUESTION. How would you manage the tax environment for sustainable business growth
in 2021 following the impact of covid-19.

The impact of COVID-19 on revenues

With the slowdown of growth estimated across the world, public revenues are declining as a
result of the COVID-19. However, the pandemic has affected public revenues in different
economies differently and the timing of the impact may also vary. In addition to the nature and
extent of the COVID-19 impact, and of confinement measures to address it, the structure of a
country’s economy, exposure to international flows including trade and tourism, sources of
government revenues, and the measures it takes to cushion firms and households from the
economic impact of the pandemic, will all be significant. Management of the Tax environment
by governments will need to address several tax administrations for businesses restoration.
Below are the measures that can be taken to manage the tax environment;

HOW TO MANAGE THE TAX ENVIRONMENT

1. Support to businesses
Immediate support to businesses is the priority during this period, to help them survive the
economic fallout from the crisis of the pandemic. In this period, the measures to be taken include
tax payment deferrals, expedited refunds, and targeted help for affected sectors. Targeted support
rather than broad-based stimulus is more appropriate while social distancing measures are
preventing normal economic activities and where fiscal situations are tight. Again, one key
priority from a tax perspective should be to support business cash flow. Measures to achieve this
can include: increased lending to firms or SMEs, providing subsidies to non-wage business costs,
tax deductions or capital allowance on expenses incurred in providing personal protective
equipment to employees and support measures targeted at specific business sectors such as
tourism/hospitality, transport, airlines etc; and allowing tax waivers and tax rate reductions.
These measures are geared towards helping businesses to survive and stay operational till the
impact of the pandemic on them is mitigated for a future rebound in a booming business activity,
where normal tax rate can be charged for revenue generations to improve fiscal policies of
economies.
 2. Support to households
Support to households is also one of the quick needs to protect households through tax and
expenditure measures, including payments delivered through the tax system. Measures to support
households can include: unemployment schemes for workers who lost their jobs during the
pandemic, a clear example is the issue of stimulus checks to citizens badly hit by the pandemic,
leading to loss of their livelihood (jobs) in the USA. Again, introducing indirect cash transfers
for households, in particular to reach households not engaged in the formal sector, which might
be excluded under other tax policy measures given out by governments. An example of this case
is the situations in Ghana, where the Government subsidized the electricity bills of all lifeline
customers and the provision of free water for all citizenry for some periods. These measures help
citizenry who are taxpayers to get some reliefs to cushion them from the impact of the pandemic,
which caused them pay-cuts and loss of jobs from employment.

3. Support to investment and consumption

There have to be tax measures to support investment and consumption. Some of these measures
include; In Ghana, no VAT is effectively charged by a donor and paid on goods contributed in
support of efforts against COVID-19. This is because the Parliament of Ghana has approved
such taxable donations as emergency relief items under the VAT laws. Also, there are increases
in thresholds for low-value asset write-offs (e.g. Australia and New Zealand), and reductions in
corporate taxes for manufacturing companies in a variety of sectors in Indonesia. Countries
outside the OECD (Organization for Economic Co-operation and Development) and the G20
have made greater use of tax measures with the goal of supporting investment and consumption.
For example, Kazakhstan lowered the standard or reduced VAT rates to support consumption.
These policy measures to support investments and consumption should take a more prominent
role during the recovery phase to help stimulate the economies.

4. Support to the healthcare sector

Support to the health sector should also be another priority in veering our way through this
pandemic. Tax policy measures to support the healthcare sector should be common in most
countries. For instance, in some countries health care workers are benefiting from a reduction in
their income taxes (e.g Ghana), and retired healthcare workers should be able to resume work
without losing pension and benefit entitlements to put their services in use to save lives (e.g UK).
In Malaysia, healthcare and immigration workers receive a special allowance. All these
incentives help in building a strong human resource in the health front to battle against the
pandemic for a revamp in economic growth.
5. Taxing the less affected sectors by Covid-19 to raise revenue

All the above listed measures are drain on the public purse, but how do economies raised
revenues to support businesses, households etc.? the clear and surest way to go is to tax more, the
sectors of the economy that are less hit by the Covid -19. In the case of Ghana and other
economies around the globe, the financial and the communication sectors are the less hit by the
pandemic and must be taxed a bit more to improve revenue generation. It is in the light of this
that, the government of Ghana is charging 5% income before tax from banks (Financial sector) to
raise revenue to finance its activities. Taxing mobile money revenues/ net comes from the
telecommunication industry is another surest way to go. These two sectors are part of the less hit
industries by the pandemic and as a matter of fact, some of these industries recorded growth in
revenues and capital returns in this pandemic era. Therefore, taxing them more will help increase
government revenues to create more fiscal space to run economies while giving assistance to
other crippling sectors.