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Home Business Economy 201601

Gov’t Tax Approach Not Yielding Desired Results

14-Jan-2016
/ Economy, Business
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It is an undeniable fact that a well-functioning tax revenue system is necessary for a strong, sustained and inclusive economic development. Funds from tax revenue are used to finance public infrastructure projects needed by businesses to thrive and expand.

Also, the provision of security and safety, good transportation network, energy infrastructure and health centres among others are funded from revenue proceeds.

However, the ever growing tax evasion by a higher percentage of the informal sector and the difficulty in identifying the physical location of most business entities among others makes Ghana more dependent than it could be on the few personal income tax payers.

Within the past 6 years, personal income tax thresholds alone have been reviewed four times with the latest review in May 2013 resulting in the least personal income tax revenue growth of 7.4% since 2009.

This downward trajectory compelled government to review its revenue mobilization strategy, GRA’s strategy for recovering uncollected debts, discovery of leakages and loopholes in tax administration, undertaking direct tax and payroll auditing and widening of tax base among others.

Nevertheless, the increase in government tax revenue in 2015 as a result of these afore-mentioned initiatives failed to curtail the persistent growth in the accumulation of government debt stock due to the growing proportion of government interest payments and salaries on the national purse.

In particular, the consistent growth in government tax revenue as a share of GDP in 2015 failed to curtail the persistent growth in government debt-to-GDP.

Thus, one may not be too far-fetched to conclude that the overburdening of current tax payers in the quest to broaden the country’s tax base is a lazy approach.

Alternatively, GN Research Analysts calls on government to fine-tune the current Public-Private Partnership policy to offer relatively favourable conditions to the indigenous private sector. Additionally, with regards to tapping the needed tax revenue from the large informal sector, government should fast track the administration of the National Identification Scheme and build an effective database for easy tracking of all tax payers.

Source: Today Newspaper

 

 
 

 

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