Taxes ―The Hope And Future Of National Development

By Doris Sodjah

 

The Ghana Revenue Authority (GRA) recently launched a comprehensive national tax campaign dubbed, ‘Our Taxes, Our Future’ to encourage more Ghanaians, especially in the informal sector, to voluntarily comply with their tax obligations.

 

The campaign is also expected to raise and increase awareness among Ghanaians about the benefits of taxation and the consequences of non-payment of taxes.


Available statistics indicate that although many Ghanaians are engaged in income-generating activities, both in the formal and the informal sectors, only about 1.2 million Ghanaians are registered to pay taxes.


The records also indicate that out of this number, about one million are in the formal sector, while only about 200,000 are in the informal sector.


This means that the contribution of the informal sector to tax revenue generation is very minimal― just below five per cent― even though the Ghanaian economy is dominated by the informal sector.


Apart from the numbers, tax compliance in the informal sector also remains a serious challenge which requires fundamental changes in attitudes to overcome.
Tax payment is a civic responsibility which all Ghanaians, no matter how little their income, must discharge.


Taxation is a means by which governments, the world over, finance their expenditure. Taxation involves levying charges on citizens and corporate entities.
Governments also use taxation to encourage or discourage certain economic activities that are not in the national interest.


It is through taxation that government constructs and improves upon social amenities and infrastructure such as roads, hospitals, schools, water and electricity, among others.


For example, it is through taxation that the Akufo-Addo administration has been able to implement its flagship education policy, the Free Senior High School policy, whereby the fees of over 400, 000 graduates from the Basic Education Certificate Examination (BECE) have been or will be absorbed by government.


Taxes are, therefore, major sources of government revenue for financing its budgets and accelerating developmental plans. It is important to note, however, that as a tax payer, one can get annual personal tax reliefs.


A tax relief is an approved deductible allowance from the assessable income of an individual which is intended to reduce the taxable income and, thereby, lessen the individual’s tax burden. These include, old age, child education and cost of training, among others.


Equally, there are penalties and sanctions in the law governing tax administration― The Revenue Administrative Act, 2009 (Act 791).


The law provides that if a person fails to comply with his or her tax obligations, or if a person fails to file a tax return as required by law, he or she is liable to pay a penalty of five hundred currency points and a further penalty of ten currency points for each day that the failure continues, where one currency point equals one Ghana cedis.


In Ghana, the Ghana Revenue Authority Act, 2009 (Act 791) mandates the Ghana Revenue Authority (GRA) to, among others, integrate the collection and management of domestic tax and customs duties, some of which are corporate and personal income, pay as you earn (PAYE), rent, capital gains, gift and dividends, to mention only a few.


The administrative provisions common to all the tax types have also been harmonized and consolidated into the Revenue Administrative Act, 2009 (Act 791).
Presently, Ghana’s revenue collection is low, compared to other Lower Middle Income countries in the sub-region. Low revenue collection seriously limits government’s ability to invest in the development of the country.


Concerted efforts and drastic measures are, therefore, required to avert economic stagnation resulting from low revenue.


Having recognized that the number of tax payers is few and that it is a civic responsibility to honour one’s tax obligations as a citizen, the option available is to broaden the tax net.


Thus, all manner of persons engaged in income-generating activities, should be made to discharge their tax obligations to the state and to do so voluntarily.
First, there is the need to increase revenue generation; and one of the means of increasing revenue is to broaden the tax net. There is also the need to pay taxes voluntarily.


Voluntary compliance means that hostile attitudes towards tax payment and tax collectors should be replaced with willingness to fulfil one’s tax obligations―and this can only happen when tax payers, particularly those in the informal sector, understand that tax payment is a civic responsibility, that tax is a major source of government revenue for financing its budgets and accelerating development.


Tax payers need to know that it is through taxation that government constructs and improves upon social amenities and infrastructure such as roads, hospitals, schools, water and electricity.


Tax payers also need to know that tax payment is grounded in law and that there are penalties and sanctions for non-compliance.


The GRA’s national tax campaign is, therefore, an initiative to educate all tax payers and the citizenry, as a whole, about what they need to know― why they should pay taxes; what their taxes are used for; and that taxation is regulated by law which applies sanctions in the event of a breach.


Please do not ignore the national tax campaign messages. Our taxes are the hope and future of our country. Pay your taxes and pay without compulsion.


The writer is an officer of the Information Services Department.