Prof. Peter Quartey
The Director of the Institute for Statistical, Social and Financial Analysis (ISSER), Prof. Peter Quartey says Ghana’s present tax system encourages evasion to counterpoint a number of individuals.
He blamed the scenario on the imposition of excessive taxes on companies and people in an try to attain targets.
Talking on the Graphic Ecobank Financial Discussion board, Prof. Quartey cautioned that tax handles should not solely be seen as technique of reaching goal, however have to be a instrument for behavioral correction and efficient income assortment.
Citing Ghana’s VAT system for example, he identified that the computation of the consumption levy has compounded the tax burdening of companies and customers.
“Our tax ranges are too excessive, for my part. Our VAT is 21% plus. Some are even straight levies that you just can not declare enter tax, and what have you ever. However have a look at our opponents. On common, some are paying 15%, 18%, and we’re charging over 21%. So what you might be doing is that you’re encouraging individuals to evade”, he cautioned.
Prof. Quartey noticed that the scenario has created an surroundings that fuels conspiracy and corruption between state officers chargeable for tax collections, and companies required to pay taxes.
“When your tax is just too excessive, it requires tax evasion. So you might be enriching customs officers, you might be enriching businessmen, and the federal government is struggling for cash”, he pressured.
In response to him, the event is made worse as a result of the truth that Ghana’s financial system is basically casual, making it tough to hint and punish tax evaders.
“Now we have a casual financial system. Over 80% of our financial system is casual. Now we have not devised a correct mechanism for taxing the casual sector”.
This, he mentioned has resulted in a scenario the place a number of employees within the formal financial system are focused and overburdened with taxes.
“All we do is the 20%. Why ought to we focus a lot on the 20% and over tax them and go away the 80%?, he quizzed.
Proffering some options, Prof. Quartey referred to as f or a severe examination of the VAT system and have interaction broadly to deliver the casual sector into the tax bracket.
“We have to have a look at this critically. In any other case, we’d not be making numerous inroads when it comes to tax income mobilisation, and that’s the reason we maintain borrowing. As a result of we aren’t elevating sufficient income”.
He cautioned that rising taxes is not going to essentially result in a corresponding improve in tax to GDP ratio.
“Tax to GDP at finest, 14%, when some are doing 18, 20, 23% inside Africa. So it tells you there’s numerous danger inherent to danger”.
He added that one option to get the general public to voluntarily pay taxes is to judiciously use income assortment within the wellbeing of the general public.
“Possibly later we’ll discuss even how effectively we even use the income, as a result of it isn’t nearly elevating the income, however how properly you utilize the income to advance your trigger”.
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DISCLAIMER: The Views, Feedback, Opinions, Contributions and Statements made by Readers and Contributors on this platform don’t essentially symbolize the views or coverage of Multimedia Group Restricted.
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