Business News of Thursday, 8 November 2018
Government must resource the Ghana Revenue Authority (GRA) to be efficient in collecting taxes rather than introduce new ones in the 2019 budget to shore-up revenue, Dr. Ebo Turkson, a Senior Economist at the University of Ghana, has said.
“Government shouldn’t introduce new taxes. I don’t think that there is a need to do that. What it must do is invest in the Ghana Revenue Authority to be more efficient at collecting taxes and to go to the source and take the taxes.
“I got excited when I wanted to pay my property tax and I called GRA, and they told me I don’t need to come over but they will send someone. Within 30 minutes they were there to take it. So, these are some of the things we need to do and not introduce new taxes,” he told the B&FT in an interview.
His comments come on the back of some analysts suggesting that the 2019 budget should introduce innovative taxes in order to increase the revenue envelope.
Professor Newman Kusi of the Institute of Fiscal Studies (IFS) is of the opinion that government should choose taxation over production, as moving from taxation to production is a risky move considering the country’s economic structure whereby the informal sector dominates.
Dr. Turkson, on the other hand, opines that it would rather be inimical to the economy if taxes are chosen over production, as companies will struggle to expand and employ – hence his call for government to commit more resources for roping-in the informal sector.
“Taxes serve as a disincentive to production, but then you are better off expanding your tax net, encouraging productive activities, and taxing the higher output. That is better because it creates employment and you get more revenue out of it. For those of us who rather believe in expanding the productive sectors of the economy, we think that is the best for our economy at the moment.
“Our failure in getting the informal sector to pay taxes shouldn’t lead us into other alternatives that will not help. So, we need to invest enough in formalising the informal sector so that we can collect enough income taxes.
“I don’t think it is something that the country cannot do; we should work toward that rather than going for the short-cut of always looking out for short term alternatives which will bring in revenue: those are not sustainable,” he added.
Finance Minister Ken Ofori-Atta will present the 2019 budget to Parliament on November 15, 2018. A major topic that has heralded the presentation is how to increase revenue, as government needs more money to fulfil the various social intervention programmes it is undertaking.
The IMF says the 2019 budget needs to address persistent revenue shortfalls and start tackling decisively the issue of exemptions, especially as its programme with government will end in April 2019.
The IFS has also urged government to devise means of increasing domestic revenue, as it makes up only 13 percent of GDP – a far cry from the continents’ average.
“It’s very ridiculous to say the least, because the average for African countries is 18 %; our GDP is now GH¢256billion. So, if we are collecting only 13% of our Gross Domestic Product, then really government has to find very significant and crafty ways of enhancing domestic revenue.”