The Minister of Monitoring and Evaluation, Dr. Anthony Akoto Osei, has said that government will block leakages in various sectors of the economy in order to recoup revenue lost from tax cuts and abolishment in the 2017 budget.
“In the interim, all of us believe that tightening administration at the ports will help bring in a lot of revenue. There are a lot of leakages. The government will put some measures there to deter people from stealing,” Dr. Osei Akoto told the B&FT in an interview.
It is reported that the country lost more than GH¢36 billion in revenue in 2015 as a result of fraudulent activities from some importers.
Government is further expected to lose about GH?400million from three of the taxes that were cut and/or abolished in the 2017 budget.
The Special Petroleum Tax cut from 17.5 percent to 15 percent is expected to result in losses of some GH?243million; Excise Duty removed on petroleum products is also estimated to result in GH?84million losses; and removal of one percent Special Import Levy on some imported goods will also result in an estimated GH?71million loss of revenue in the first year.
Asked how government plans to widen the tax net to raise more revenue to reduce the adverse effects of the tax cuts on the economy, Dr. Osei Akoto said government will take seriously implementation of the national identification system to formalise the informal sector.
“The biggest thing that we will start this year is the national ID system. Once we get the national ID it will be much easier to formalise the informal sector. Right now, we have challenges because even though we have three million people registered as workers, we only have about 1.3million paying taxes.
So, the ID system to track people will make the situation much better. Once you formalise the economy, then it will be much easier so that everybody will be tracked by his or her ID. So, we are going to be very aggressive in getting the national ID in place,” he said.
It is reported that over 80 percent of the country’s economic activities are in the informal sector, prompting various experts to urge government to find ways of widening the tax net to include as many people as possible in the sector to pay taxes.
Professor of Finance and Dean of the University of Ghana Business School (UGBS), Professor Joshua Yindenaba Abor has been a strong advocate about taxing the informal sector to rake in revenue for government.
“Equity here means you don’t burden the few but rather expand the tax net to cover a broader part of the system. We should look at the informal sector, which hosts a number of businesses that are evading tax; we need to capture that aspect as well,” he told B&FT in an interview April last year.
“We need efficiency in the tax system; when you have a tax system in which there are leakages, and we have monies going into private pockets, then of course the system is going to lose out.
“Once we are able to plug loopholes in the tax system, and we are also prudent with our spending, we can preserve more for social and economic investments. I think we have huge potential to increase our tax revenue, but the biggest problem has to do with the limited coverage and system leakages,” he added.
source: b&ft