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Business News Thu, 19 May 2022

Ghanaians don’t earn value for money on taxes – Chartered Economist

Chartered Economist, Paul Frimpong, has stated that Ghanaians do not benefit from taxes contributed toward national development.

Describing taxes as social contracts between the government and citizenry, he indicated that through taxes the nation raises revenue for development. 

“Taxes are the first source of revenue for development by gov’t event before going for other external sources of income. It is a simple question of the social contract signed, and if the citizens are doing their part, are they getting the benefits?” he queried.

The existing standard of living and current happenings in the country will cause you to doubt whether Ghanaians are earning value for money in terms of taxes they pay.

In an interview with Samuel Eshun on the Happy Morning Show, Paul Frimpong stated, “In our situation now, there are some downsides in the kind of value we earn as taxpayers. It doesn’t mean gov’t is doing nothing, but time and time again, we’ve seen reports from some gov’t and public institutions which are disheartening. This leads us to think they’re wasting taxpayers’ money. Everything the gov’t does is paid for by the taxpayer.”

He added “If gov’t borrows from somewhere, they are borrowing on our behalf and we’re going to pay for it. If you look at the kinds of reports which come out from some of these gov’t related expenditures, it leads one to question and conclude we are not getting value for money with the taxes we pay.”

Paul Frimpong indicated that corruption also affects the benefits taxpayers enjoy. According to him, corruption is a key element which affects “us at the end of the day and prevents us from getting enough from the tax revenue. The little money we get from tax is lost to corruption because of ineffective monitoring systems.”

The capacity of a country to provide for the welfare and security of its citizens, as well as to develop and consolidate representative democracy, is determined by its ability to raise enough resources. Democracies are not only built on periodic elections, but also on a social contract between governments and citizenry regarding the collection and spending of public revenue.

As in other African countries, public revenues in Ghana depend on taxation. Many and varied factors underpin a country’s ability to collect enough tax revenue from domestic sources. Paramount among these is citizens’ level of compliance, often influenced by the efficiency of the institution responsible for tax administration, the structure and magnitude of tax rates, and the ability and willingness of citizens to pay. These factors call into sharp focus the need for tax reforms.

Indeed, Ghana has undertaken a series of tax reforms since the commencement of the Fourth Republic in 1992. Controversially, a Value Added Tax (VAT) was introduced in 1995, withdrawn as a result of widespread protests, and reintroduced in 1998 after the comprehensive education of citizens. Besides, direct taxes (corporate and personal income) have also undergone various reforms to restructure thresholds and widen the tax base through measures that encourage tax payment by small-scale self-employed businesspersons.

A major reform (2009) is the integration of the three major tax revenue institutions – Internal Revenue Service (IRS), the VAT Service and the Customs, Excise and Preventive Service (CEPS) – into a single agency – The Ghana Revenue Authority (GRA). The GRA aims to modernize tax revenue collection and administration as well as improve customer service.
Source: etvghana.com