Finance Minister, Ken Ofori-Atta, says concerns that the government is burdening businesses with excess taxes are misplaced.
According to him, “I believe most of us do not pay taxes.”
He explained that with Ghana’s current revenue to GDP ratio standing at only 13% when it should have been at 20%, it means, “a third of taxes that should be paid are not being paid.”
Citing an example from the introduction of the e-VAT system, he said, “There was a company that was reporting 342,000 cedis of sales a month and paying 40,000 cedis in VAT. After the system was put in place, sales were 158 million a month and VAT was 19.8 million. So you begin to understand some of these people that GRA is over-auditing them clearly are not doing what they’re supposed to do.”
The finance minister who was speaking on the sideline of the IMF spring meeting in Washington DC said the introduction of new tax measures are not geared at overly burdening the business sector.
He explained that the current economic situation and the country’s need to ramp up revenue mobilisation following its obstruction from the international capital market are justification for the tax hikes.
He, however, is optimistic that in the near future when the country is in a much better economic place, some of these taxes will be removed to allow for more growth and expansion.
“So once you begin to get all of these appropriate taxes in place, certainly you then get into a period where you actually – as we came in 2016, you remember in 2017 we cancelled a lot of taxes – as we begin to build up then certain taxes may not be necessary, but we need the revenue now to be able to move in that direction.
“I believe that the digitalization will help, and as we move towards 18-20% revenue to GDP it will ease. Because we as a market oriented philosophy for our government, we will always look for ways in which we will make our businesses pay as little taxes as possible to ensure that employment and expansion comes into place, but there are periods in which we need to generate appropriate taxes so that we can fund the budget,” he said.