Government to enforce tax compliance measures - Finance minister

Government will enforce tax compliance measures to enable it to achieve revenue targets for 2019, the Minister of Finance, Mr Ken Ofori-Atta, has assured.

Speaking at a budget forum organised by Pwc Ghana, an accounting, tax and audit consultancy firm, Mr Ofori-Atta said all efforts would be made to enforce the measures to ensure that individuals and businesses fulfilled their tax obligations to the State.

Government has set a target of GH¢58.9 billion in the 2019 budget, which is about 25.9 per cent higher than the GH¢46.8 billion estimated in the 2018 budget, to meet its social and development obligations.

“Companies and individuals must pay their taxes so we want them to pay. They should not wait for us to come at them before they pay. It is an obligation they must fulfil and we will not relent in ensuring that they do what is expected of them,” he said.

Mr Ofori-Atta said the Ghana Revenue Authority (GRA) would be working very actively with the Auditor General and the Special Prosecutor to enforce compliance.

Mr Ofori-Atta said enforcing tax compliance alone would help the government achieve its domestic revenue estimates of GH¢57.8 billion.

Of the amount, non-oil tax revenue was expected to rake in about GH¢42.9 billion, reflecting the impact of expected improvement in tax compliance and reforms in revenue administration.

Meanwhile, an Associate Director at PwC, Mr Abeiku Gyan-Quansah, who also made a presentation at the forum, cautioned government not to rescind on its decision to focus on tax compliance to boost domestic revenue mobilisation.

“We need to really focus on tax compliance; otherwise we may not be able to achieve that particular target,” he said.

He explained that although the government outlined in the 2018 budget certain plans to boost domestic revenue mobilisation, these did not materialise.

“The government outlined certain plans in the last budget but as far as PwC is concerned. When it comes to the direct tax-related laws that ought to be passed, we are saying that the government has scored nine out of 10, but going through the indirect tax-related changes, five out of six, and finally in terms of tax administration measures, we have two out of four, which gives the government about 50 per cent,” he said.

He encouraged government to adopt alternative dispute resolution mechanisms to settle tax issues and focus a lot more on ensuring that modified taxation, which had been on the country’s law books since 2016, was implemented.

Mr Alhassan Andani, Managing Director of Stanbic Bank, said payment of tax is a civic responsibility and urged Ghanaians to fulfil their obligations to the state.

Mr Vish Ashiagbor, Country Partner PwC Ghana, said in many respects the 2019 Budget statement builds on the foundations laid out in 2018 and 2017 Budget statements.

It focuses on building a more dynamic and stronger economy by accelerating economic growth, modernising agriculture, industrialising society and protecting the vulnerable to create jobs and prosperity for the Ghanaian people.

Meanwhile, PwC Ghana has called on government to rethink its VAT regime because of its negative impact on businesses operational cost.

According to PwC’s analysis of the 2019 Budget, the conversion of the NHIL and GETFund into straight levies, is turning out to be counterproductive for businesses.

“There is a need for government to take a second look at de-coupling NHIL and GETFUND rates from VAT rates as industry concerns grow. Its complexity and the fact that industry was not pre-informed to enable them to factor it into their yearly projections seems to have resulted in an unexpected increase in operational costs, thereby overshadowing the policy’s intention of raising revenue,” the firm stated.

It called for a simplified tax system to reduce compliance cost and widen the tax base as well as eliminate many exemptions and leakages, rather than increasing already-high marginal tax rates.

“We think that the tax system should not only remain broad-based, progressive and fair, but also be competitive and pro-growth,” PwC said in its analysis.