Joseph Boakye Danquah
As a tax accountant, I dare to say that this country must seek to design and implement a tax system that can finance a reasonable level of public spending in an effective and equitable manner.
Our tax system should be able to raise enough revenue to finance public expenditure without recourse to excessive borrowing.
To do this, the system should have the following key ingredients:
(1) The system must be equitable and progressive
(2) The system must have the least possible disincentive effect on economic activities
(3) Must be broad enough to rope in at least ninety eight percent (98%) of all eligible taxpayers.
The challenge for Ghana in establishing a tax system that has the ingredients described above can be placed in three baskets: First, the informal nature of our economy makes it nearly impossible to identify eligible taxpayers, let alone determining how much tax to be collected from them.
Second, the inability of the GRA to do their job effectively due to myriad factors, including the use of antiquated and or inadequate tools and strategies.
Third, Lack of data in this country has been and continues to be a serious drawback on revenue generation for the government.
These factors have contributed significantly to low tax revenue to GDP ratio that the country has been enduring. Whiles some African countries are doing between nineteen and twenty percent (19% – 20%) tax revenue to GDP ratio, Ghana has been doing about sixteen percent (16%). To put it in a better context, some European and American economies are doing about thirty seven percent (37%) on average.
The need to collect more taxes in this country can therefore not be over emphasized: The effort of government to formalize the economy through policies and programs such as address system, national identification program, introduction of tax identification numbers, and efforts to re-tool Ghana statistical service must be supported by all well-meaning Ghanaians.
I am however of the opinion that efforts by government can be done in a more effective and efficient way. I see no reason why the Ghana card system is being implemented separately from the digital address system and Tax identification numbers (TIN). The recent uproar about “NO TIN, NO FREE SHS” is needless. The push back against TIN is avoidable.
The government can roll out the Ghana Card together with the TIN; any citizen who registers for the Ghana card will be issued a unique identification number that can be linked with the full name and date of birth of that citizen. That unique number will be the most important identification for that individual followed by the date of birth and name of that individual in that order.
The Statistical Service in collaboration with the National Identification Authority (the agency issuing the Ghana card) can then easily create a national database of both citizens and non-citizens based on these data generated by the registration for Ghana card.
The program must be designed to allow hospitals and clinics to register newborn babies for their unique number before they are discharged from the hospital or clinic. The GRA can utilize this unique identification number for tax collection purposes as is done in other countries.
This unique number can be given any benign name, such as Ghana number, social number etc. There will be no need to call on the public to separately register for TIN which is generating so much resistance. Ghanaians are generally not used to paying tax, so any move by the government that suggests that the government is gearing up to take taxes from them is always met with fierce resistance. That is why I am advising the government and GRA to reconsider this whole TIN registration brouhaha.
Government could request all citizens to file tax on annual basis irrespective of one’s level and source of income if these suggestions are considered.
The GRA and government as a whole will certainly do better in terms of tax collection at all levels, and it will be done more efficiently and effectively.
Columnist: Joseph Boakye Danquah is a tax accountant and former NPP Parliamentary aspirant, Subin Constituency