Declutter tax regime for greater compliance
Barring any last minute changes, the Minister of Finance will lay before Parliament, on Wednesday, November 15, the 2024 Budget statement and Government’s Economic Policy.
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The stakes are much higher in this year’s budget, unlike many in the past, on account of the country’s dire economic challenges coming at a time of unprecedented actions with regard to the Domestic Debt Exchange Programme (DDEP) which has negatively impacted the investments of individuals and businesses alike in modern Ghana history.
Ahead of the presentation, many finance and economic experts including industry captains and various business associations have been heavy with their calls on government to review the present tax regime to free businesses of the financial suffocation they presently reel under.
An economist and former banker, Naa Alhassan Andani, in an interview with the Daily Graphic last week, summed it all up when he urged the country to table a budget that shows a clean departure from the past to one that brings major reforms in taxation.
According to him, the country’s tax regime was the biggest challenge because it was too fragmented and put the burden on a few compliant individuals and companies.
Needless to reiterate our various calls in our previous editorials the Graphic Business fully align with the call in view of the fact that it has become the norm for governments to target, in particular, the biggest taxpayers and those already in the tax net by raising existing taxes in a quest to increase domestic revenue.
We also agree that the present tax system has to be drastically simplified with measures to increase compliance because we trust that this is one of the surest ways to increase collection from eligible taxpayers.
At all cost, we as a country must be able to find innovative means to resolve our numerous challenges and resist the temptation of having to roll on from one tax to the other to avoid fragmentation.
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In the last decade or so, we have seen the introduction of taxes such as The Electronic Transfer Levy (E-Levy), the COVID-19 Levy, the National Insurance Levy (NHIL), GETFund Levy, the Growth and Stabilisation Levy, the Financial Sector Recovery Levy and the Communication Service Tax (CIT). These, just to mention a few, are fragmented taxes on the country’s laws.
The paper sees these as too complicated, hence the need for us to listen to the private sector and declutter the tax sheet, simplify it, enforce compliance and put severe penalties around those who flout tax payment.
The Graphic Business is not oblivious of the fact that with the doors of the international capitals markets shut to the government because of the country’s high debt levels which have reached unsustainable limits, the only option left is to look within.
While we agree with this move, we strongly believe that it is equally important for the government to listen to the concerns of the people including experts and the business community and undertake a drastic reform of the tax regime to encourage more people to comply as part of their obligation to the state.
For instance, aside from the high corporate taxes, we even currently have VAT imposed on some taxes, a situation which does not sit well with tax payers. While recognising efforts by government to streamline tax efficiency through digital platforms, we believe a lot more needs to be done.
It is our humble wish that the government will heed the calls to outline those suggested reforms in the budget to help ease the pressure on businesses while increasing domestic revenue through taxes that are well structured, well thought through and well simplified to demystify the system and even encourage voluntary compliance at all levels.