Parliament recently passed the Excise Duty Amendment Bill 2022, the Growth and Sustainability Levy Bill, 2022, the Ghana Revenue Authority Bill 2022 and the Income Tax Amendment Bill 2022.
These new taxes are expected to assist the state rake in about GH¢4 billion annually as part of domestic revenue mobilisation.
The bills are also crucial to aid the government’s quest to facilitate the Board Approval for the $3 billion International Monetary Fund (IMF) Programme staff-level agreement. The introduction of these new tax bills has been met with fierce opposition, especially from the business class.
Responding to the concerns raised, Ken Ofori-Atta explained that, Ghana’s current revenue-to-GDP ratio stands at only 13% when it should have been at 20%, and this means, “a third of taxes that should be paid are not being paid.”
The finance minister cited an example of a company that was misrepresenting its productivity data just to evade taxes.
He said, “There was a company that was reporting GH¢342,000 of sales a month and paying GH¢40,000 in VAT. After the system was put in place, sales were 158 million a month and VAT was 19.8 million. So you begin to understand some of these people that GRA is over-auditing them clearly are not doing what they’re supposed to do.”
Ken Ofori-Atta listed the need to ramp up revenue mobilization, especially following the country’s obstruction from the international; capital market as justification for why the new taxes are needed.
He explained,“So once you begin to get all of these appropriate taxes in place, certainly you then get into a period where you actually – as we came in 2016, you remember in 2017 we cancelled a lot of taxes – as we begin to build up then certain taxes may not be necessary, but we need the revenue now to be able to move in that direction.
“I believe that the digitalization will help, and as we move towards 18-20% revenue to GDP it will ease. Because we as a market-oriented philosophy for our government, we will always look for ways in which we will make our businesses pay as little taxes as possible to ensure that employment and expansion comes into place, but there are periods in which we need to generate appropriate taxes so that we can fund the budget,” he added.
EAN/FNOQ
Ken Ofori-Atta, Finance Minister