Govt Hints of New Tax Policies; Mid-Year Budget Review to Reveal Details
The Minister of Finance, Mr Ken Ofori Atta, has hinted of a possible introduction of new tax policies which will form part of measures to shore up the country’s domestic revenue mobilisation.
He, however, fell short of confirming whether or not the new policies will result in the introduction of new taxes.
Mr Ofori-Atta, who dropped the hint in an interview with the media on the sidelines of a conference on Ghana Beyond Aid in Accra last Thursday, said the government would present to Parliament, a package of tax policy measures in the mid-year budget review as part of efforts to ensure sustained funding for its key programmes.
The hint comes at a time when domestic revenue mobilisation has become a challenge, in spite of the numerous efforts by the Ghana Revenue Authority (GRA) to rope in more people into the tax net.
Presently, only a minute percentage of the people are in the tax net and the announcement may spark some agitations in view of how similar hints in the past have only ended up in increasing the taxes for those already in the net and not necessarily widening it to rope in the many who evade or avoid taxes.
This year, the GRA has an arduous task to meet a tax revenue target of GH¢39.8 billion. This is at a timw when the government recently announced the abolishing of up to 64 taxes at various levels.
In 2017, the Authority failed to meet its target as it raked in GH¢ 32.3 billion, representing a shortfall of GH¢1.1 billion. Earlier in the year under review, the government had either reduced or abolished taxes it referred to as nuisance taxes. That exercise cost the nation more than a Ghc1 billion.
To ensure the buy-in of the new tax reforms yet to be announced from those in the informal sector, in particular, the Finance Minister said the Ministry of Finance was currently in discussions with the Ghana Union of Traders Association (GUTA), the Association of Ghana Industries (AGI), and would, therefore, come up with the new tax measures after consultation with all the relevant stakeholders.
“We have been quiet transparent with regard to the resources we have and the expenditures. I think by the end of the discussions, we will be able to know what type of package we should introduce. Whether we are decreasing some or increasing some,” he noted.
“So far we have only gone on eliminating taxes and reducing taxes so the government clearly has been giving and its time for us to sit down and move to the next level and look at what we have to do to be able to attain a strong country,” he added.
GH¢1 billion lost
The minister also pointed out that the country lost about GH¢1 billion as a result of eliminating some taxes last year.
“But the issue of eliminating nuisance taxes is that you also believe in the genius of the Ghana entrepreneur to respond through productivity.
When you take away taxes, you create economic freedom and people begin to work and you get taxes from them”, he said.
Implementation of TIN
Mr Ofori Atta also noted that the implementation of the Tax Identification Number (TIN) policy was very instrumental in improving the country’s domestic revenue mobilisation.
He, however, pointed out that for this to be successful, there had to be a voluntary compliance on the part of the people.
The Moving Beyond Aid conference was jointly organised by the Government of Ghana, the African Centre for Economic Transformation (ACET), and the International Monetary Fund (IMF) to brainstorm on how to improve domestic revenue mobilisation (DRM) in some selected African countries.
It was aimed at discussing how stepping up DRM could help countries working on the Compact with Africa Initiative (CWA) overcome aid dependence, ease financing constraints, and enhance growth prospects, which were all key elements to achieving prosperity without jeopardising debt sustainability.
The initiative is to attract private investment to the CWA countries by ensuring macroeconomic stability.
The conference provided solutions on how to deal with institutional and political constraints in revenue mobilisation, improve tax compliance, and alleviate base erosion and profit shifting by multinational companies.
It also focused on common DRM challenges and proposed short- and medium-term growth-friendly revenue-enhancing solutions.
It provided a forum for knowledge sharing and peer-to-peer learning among senior government officials, experts, representatives of the civil society, and development partners.
Rethinking development trajectory
Earlier in his closing remarks during the meeting, Mr Ofori Atta said there was no doubt about the need for developing countries to rethink the development trajectory and support systems for sustainable developments in this era of diminishing foreign aid and grants.
He said fortunately, the sustainable development goals in the African Union Agenda had highlighted the need to increase DRM as they strove to achieve the same goal of development for its people.
“Our new shared partnership in the G20 Compact with Africa also emphasises this new paradigm shift for growth,” he stated.
Source: Graphic Online