Government must find alternative means to impose new taxes or increase compliance rate if it is to achieve targets on tax cuts.
This is the suggestion from tax consultant, William Owusu Demetia.
“Government has two options; it has to either find another item that has not previously been taxed to impose the taxes on or pursue defaulting tax payers to pay their taxes. By this the tax compliance could increase from about 50 to 70 percent,” he stated.
Among the numerous economic interventions promised by the NPP ahead of the elections was the reduction in taxes to ease the high cost of doing business in Ghana.
Taxes such as the 17.5 percent VAT on financial services and domestic air tickets would be scrapped while others such as corporate income tax would be reduced from 25 to 20 percent.
Also, the special import levy , 17.5 % VAT on imported medicines not produced in Ghana, 5% VAT on Real Estates are expected to be abolished under the NPP government.
Meanwhile the 17.5% VAT for small enterprises is expected to be reduced to 3% flat rate.
The pledge has since been reiterated by the Finance Minister Nominee, Ken Ofori Atta.
But William Demetia tells Citi Business News government’s revenue risk a huge dip if it fails to identify similar revenue generation options.
“This will enable government get revenue from the additional twenty percent to compensate for a drop in the rate that they are proposing,”
“Government has to be able to ensure that its revenue basket is not reduced; it has to be maintained or improved,” he explained.
In a related development, the Director of Research at the African Center for Economic Transformation (ACET), Dr. Joe Amoako-Tuffour, has charged Mr. Ken Ofori Atta to outline plans on how to implement the tax cuts promised by the Nana Akufo-Addo administration.
According to Dr. Tuffour, government should work to meet the target as business expectations are high on taxes.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana