We need more revenue - Terkper talks up taxes
The Minister of Finance, Mr Seth Terkper, has defended the current tax regime and the temporary introduction of special levies on selected businesses and individuals, describing them as relevant economic tools that are needed to bring the economy back on track while reducing its appetite for borrowing.
Advertisement
As the economy transitions from lower middle income to a middle income economy, the minister said more revenue would be needed to help plug the ensuing financing gaps, hence the government’s decision to turn to raising more taxes
So far, Mr Terkper said those initiatives had delivered positive results, with the special levies on energy, imports and stabilisation already accounting for about 1.04 per cent to three per cent of tax revenue between 2013 and last year.
Speaking at the 2016 GRAPHIC BUSINESS-Stanbic Bank Breakfast Meeting in Accra on Tuesday, the minister explained that the application of the extra revenue from the levies had already helped in correcting the fiscal slippages the economy experienced in the years leading to their imposition.
“That two per cent to three per cent of tax revenue is significant in doing the corrections. Otherwise, the way to fund the budget would have been to borrow and remember we already talk about high debt levels,” he said at the event.
Between 2013 and last year, tax revenue rose from GH¢14.30 million in 2013 to GH¢24.15 million in 2015, representing a 68.9 per cent increment within the three-year period.
Discussion tax
The breakfast meeting was initiated by the Graphic Business, the weekly financial and economics publication of the Graphic Communications Group, with support from Stanbic Bank Ghana Limited.
It aimed at creating a platform for informed discussions on the new Income Tax Act (2015), Act 896, which took effect on January 1.
Other Trending Stories
--The Act consolidated and modernised the country’s tax laws, some of which had been in operation for over a decade.
It also increased as well as introduced new taxes on some sectors of the economy, resulting public outcry, mostly from the business community.
Correctional tools
While admitting that the new taxes were having a toll on businesses, the finance minister said the country needed to devise a set of economic tools, which it can always rely on whenever the economy slipped.
But instead of allowing those tax measures to remain in operation, he said, the country needs to learn to withdraw them after they have served their purpose.
He mentioned the fiscal stabilisation levy, the import levy and energy sector levies are some of the initiatives that would be withdrawn in due course.
Need for self assessment
The minister bemoaned the low levels of self assessment by tax payers in the country and called on businesses to make it a point to declare their tax obligations to the Ghana Revenue Authority, which he said came with some benefits.
“Ghana is one of the countries that has not had self-assessment for a long time. Because of that it leaves the GRA to guess how much tax you should be paying, when in fact you can do your own assessment and discuss with them,” he said.
He also mentioned the Tax Administration Act as one of the laws the government was hoping to use to in streamline tax administration in the country.
The bill is currently before Parliament and when passed, would help revamp the country’s tax laws.