Tax allowances, benefits of ministers, MPs – Tax experts

GOVERNMENT must tax the allowances and other benefits earned by ministers of state and Members of Parliament (MPs) and not just their basic salaries, some tax experts have recommended.

According to Tax Consultant, Eric Amponsah Boateng, this is necessary because government must make up for the loss in tax revenue to the state following the announcement of various tax cuts and removals in the 2017 Budget.

“The 2017 Budget has abolished many taxes and we are told that the Corporate Tax will also be reduced from 25 to 20 per cent by the end of the year. This means we have to look at other areas to make money to fill up that revenue gap,” Mr Boateng said.

“The Ghana Revenue Authority (GRA) must tax the allowances and benefits earned by government officials. GRA should not just tax their basic salaries because they [government officials] earn more in allowances and benefits too,” he added.

Mr Boateng said the GRA should enforce the filing of tax returns by government officials. He said the Authority must deter especially MPs from filing their tax returns after four years by imposing penalties on them when they do.

The Tax Consultant said some professionals like lawyers and accountants also fail to file their tax returns and even though it is easy for the GRA to trace them through associations like the Ghana Bar Association (GBA) and the Institute of Chartered Accountants, Ghana (ICAG), they (GRA) do little about it.

Under the Revenue Administration Bill,2016, there is a penalty for failing to file tax return; section 73(1) stipulates that: “A person who fails to file a tax return as required by a tax law 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.”

Abdallah Ali-Nakyea, a Tax Analyst, said there is no law that exempts the allowances and benefits of government officials from being taxed and that the GRA must do its work well.

“There is no rule that says the allowances and benefits of government officials should not be taxed. There is something not going well. It is a provision in the Tax Law that taxes must be paid on all remunerations and compensations so the GRA should do its work,” Mr Ali-Nakyea lamented.

He said it is disappointing that the GRA usually does a thorough audit on private companies but fails to do same with ministries and State-Owned Enterprises (SOEs).

“How many audits have the GRA done in the public sector? But the GRA does that in with private sector, where they audit them thoroughly before they file they are made to file their tax returns,” Mr Ali-Nakyea noted.

“Even with Withholding Taxes, unless a company has an exemption, how many suppliers or providers of goods and services to government pay Withholding Tax? Do these government entities ensure that their suppliers pay withholding taxes?”

Both tax experts grieved the inconvenience some tax payers go through to file their returns every time.

According to Eric Amponsah Boateng, in the Eastern Region for instance, small tax payers in Koforidua will have to go to Nkawkaw where there is the Medium Tax Office to file their returns while medium tax payers in Nkawkaw will have to go to Koforidua to do same.

“It is only in Accra that we are fortunate to have more offices. What the GRA should do is to allow for all tax offices nationwide to receive taxes for all tax ranges,” he said.

Mr Ali-Nakyea said attributed this to the failure of the Domestic Tax Division of the GRA.

“If you have a structure that is not working, you revise it,” he stated.