Government must streamline regressive tax measures - Tax Justice Coalition

The Tax Justice Coalition (TJC), a tax and policy advocacy group has asked the government to review and streamline the country’s “regressive” tax measures as soon as practicable.

According to the group, the current structure of several tax measures, including the Value Added Tax (VAT) and other indirect taxes, were impoverishing disadvantaged Ghanaians, and pushing more people into poverty.

The group made the call on Friday during a session in Accra to analyse the 2023 mid-year budget review and make policy suggestions for better revenue collection in the country.

It urged the government to take immediate steps to ensure that taxes do not overburden the poor, who are often impacted by regressive taxes and suffer the most during economic downturns.

Ghana has recently had economic challenges, notably significant inflation, which the World Bank projects will push about 850,000 Ghanaians into poverty by 2022.

Vitus Azeem, Chairman of TCJ, told the Ghana News Agency on the sidelines of the event that fair and progressive taxation would foster voluntary compliance.

He maintained that this would increase domestic revenue mobilization to fund public goods and services.

“Much as we are facing an economic crisis, which hits hard on the ordinary Ghanaian, there is the need for adequate measures to protect the welfare of vulnerable Ghanaians.

“That is why we oppose excessive reliance on regressive taxes. VAT is already high, and when paired with petroleum and other taxes, it raises the entire cost of fuel, which raises transportation fares and food prices. This is detrimental to the welfare of the average citizen,” he stated.

The Anti-Corruption Campaigner asked the government to adopt a more progressive and consumer-friendly tax policy, as well as to be aggressive in collecting taxes on income, wealth, and property.

Mr Benedict Doh, Finance Manager at the Ghana Integrity Initiative (GII), also stated that indirect taxes, such as VAT, are inherently regressive.

“VAT as we have it now is regressive because it has cascading effects; we see a situation where the Ghana Education Trust Fund (GETFund) levy and the National Health Insurance Levy (NHIL) are treated as trade levy, not as input tax.”

Such a situation, he argued, allowed those levies to be passed on to consumers as a charge before VAT was collected, “…which has negative implications for businesses because it affects their profitability. This is something that needs to be addressed.”