A technical advisor to the ministry of finance, and a former Commissioner of Customs, Isaac Crentsil, has indicated that the government of Ghana intends to widen the tax net by improving tax education, reviewing and implementing laws that tax the e-services sector as well as enforcing stiffer sanctions to non-compliant individuals or companies, and according to him, information technology would be at the heart of such reforms.

“If you look at the 2020 budget, there were so many measures that government have put in place to ensure that the tax net is widened. Government is focusing on the online services, online sales, etc. We’re looking at the laws so that we will be able to do an effective taxation in the e-services sector,” he explained.

Informal sector

Isaac Crentsil, interacting live with the public on Eye on Port added that Ghana’s budget for the year 2020, is focused on addressing the informal sector, which is the large chunk of businesses in Ghana, and measures have already been put in place to rope in individuals and companies in this sector.

He said not enough had been done previously to make members of the informal sector understand their tax obligations, and a lot is being done to first educate them, and then simplify tax payment methods to increase compliance in that sector.

“We are now going to appeal to them. We are also going to make sure that the tax processes and complexities are simplified by way of technology,” he said.

The Former Commissioner, who admitted that there are leakages in tax generation of the country, disclosed that the GRA would deploy robust auditing to plug loopholes in the tax systems of the country and heavy sanctions would apply to non-compliant citizens.

“We are interested in dialoguing to let citizens appreciate their tax obligations. But if they decide not to pay, auditors will find out and then they will pay fines,” he added.

He also revealed that, the central government is collaborating closely with the local governments, to enforce the collection of property taxes which is another area that is underexplored when it comes to tax mobilization for the state. Again, he said technology would be instrumental in this objective.
Production-oriented

He indicated that government has decided to transform the economic policy of the country from one focused on taxation to one focused on production as a more effective means of widening its tax net, since through an increase in production, income would increase.

“Taxes are based on income and therefore if you are not generating income you cannot tax,” he said.

He said this is why the government has introduced flagship programs such as the 1 District 1 factory initiative and the reduction in import duties, to stimulate industries to produce more and generate income for the country.

Low import volumes

However, he admitted to the statement of the finance minister that the underperformance in tax revenues mainly stems from shortfalls in international trade taxes, including import duties, Levies, external VAT, resulted from lower import volumes and high admittance of imported goods into the zero-rated and tax-exempt import brackets.

He explained that government didn’t meet its anticipation of higher import volumes due to reduction in duties which were meant to reduce the cost of doing business at Ghana’s ports.

“The imports volumes reduced. There was this anticipation that once you reduce the benchmark values, more imports would come in. But we couldn’t,” he revealed.

He, however, expressed confidence that import volumes would increase over the next few months, as importers would better appreciate these incentives and factor it in their business decisions.

“That is why I am confident that going forward in 2020, things will change. I am very positive about this.”

Reduce market prices

He also urged the trading public to let reductions in duties at the port trickle down to the market so that the basic consumer can also enjoy these reliefs.

“When we started this policy they told us that it was old stock and we are in the ninth month of implementation and still they claim to be selling old stock. But I think going forward we have to engage GUTA and AGI to find out why prices don’t reflect on the market,” he expressed.

The Technical Advisor to the Ministry of Finance also admitted that the Customs Division of the Ghana Revenue Authority needs to reorient the public more transparently on tax directives and policies in order to improve the Ghanaian citizenry’s understanding on tax administration for the overall goal of effective revenue mobilization.