Tax increments show the inability of government to find other streams of tax revenue.

tax increment

“In the last couple of years the revenue envelope has failed to respond to various tax measures that has been implemented.”

Prof. Godfred Bokpin, head of the University of Ghana’s Business School, said in an interview on Joy News’ PM Express show.

He was speaking about the tax increases in the 2019 mid-year budget review by the Finance Minister, Ken Ofori-Atta in parliament on Monday, 29 July.

The Minister proposed an increment in the Energy Sector levies (EXLA) and Communication Services Tax (CST).

These taxes were approved on Friday, 2nd August by Parliament.
The EXLA has increased prices of petrol and diesel have been increased by 90 pesewas per gallon. Liquefied Petroleum Gas (LPG) has been upped by 8 pesewas per kilogram.

The upward review in the CST means every Ghanaian, who uses a mobile phone will now pay more, for the same time spent making calls and browsing the internet.

It will be virtually impossible for any country to develop without taxes. So, when the present government came into power, it indicated that it will improve tax collection in the country.

‘The tax base will be broadened by formalizing the economy through the national identification card system among others. We believe that these initiatives will maximize revenue collection while rationalizing expenditures.’ Finance Minister Ken Ofori-Atta said in 2017.

This, the government said will help increase the number of tax payers in the informal sector. The informal sector is defined by the Ghana Statistical Service as businesses which are not registered with the Registrar-General’s Department and do not keep formal accounts.

It is two and a half years in the government’s tenure and the issuance of the National Identification Card is not even half way complete.

The Tax Identification Number (TIN), which is a unique number generated by the Ghana Revenue Authority (GRA), for persons and companies upon application, has been relatively successful in increasing tax compliance. The TIN has been in existence for a while now but this government’s efforts has made it more successful.

But, the issue is many Ghanaians in the informal sector don’t have (TINs).

The informal sector’s contribution to the economy was GHC73 billion in 2017. That was 28.6 percent of the total value of goods and services produced in Ghana, also known as (GDP).

Available statistics from the Ghana Statistical Service indicate that close to 1.2 million Ghanaians are registered tax payers. Only 200,000 Ghanaians in the informal sector are registered tax payers.

This burdens 1.2 million Ghanaians with the duty of providing taxes to fund government’s numerous projects.

Professor Bopkin indicates that the increase in taxes were “inevitable” because as a country we have failed to look at other ways of generating tax revenue.’

According to the economist, because of this failure our leaders use the “lazy approach”, which is imposing excess taxes on the citizenry to generate revenue.

“This has been Ghana’s problem, we are more efficient when we are in opposition, when we are in government then the reality becomes hard for us to manage,” he added.

He also said, in-addition to our woes, those who willingly comply with paying their taxes are “very low”.

The ability of Ghana’s leaders to devise creative ways to find other streams of tax revenue for the country is clearly challenged.

Relentlessly, the Akufo-Addo led government has pushed the idea of moving Ghana’s economy from “taxation to production”.

However, the old ways of imposing stifling taxes on Ghanaians still persists.

This act defeats the reasons why Ghanaians voted for the present government, one of which was to be freed from  unnecessary taxes.

By: Kofi Boateng (kofiboatengj243@gmail.com)

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