Tax net to be widened further

Accra, Sept. 28, GNA - Government revenue generating authorities are initiating a new programme to capture citizens of high net worth who are currently unknown to the tax authorities as part of efforts to widen the tax net.

Mr Harry Owusu, Executive Director of the Revenue Agencies' Governing Board, said the programme was aimed to identify individuals and professionals such as Lawyers, Architects and Engineers, who earned high incomes from their activities but were not paying the correct amounts of tax or were not paying the tax at all.

Speaking at a workshop organized by the Ghana National Chamber of Commerce and Industry on "Advocacy for Tax Rate Reduction and Widening of the Tax Net" in Accra on Thursday, Mr Owusu said the target groups would be assessed by the neighbourhood within which they lived, the kind of buildings they lived in and the type of cars they drove.

"The programme will target those individuals to make them responsive to the dictates of the law," Mr Owusu said. He added that it was also to ensure that such people lived up to their responsibilities. The Chamber organized the workshop in conjunction with the Business Support Advocacy Challenge (BUSAC) and other agencies to discuss research findings on tax rates in Ghana and tax regimes in like countries in order to make proposals as input for the 2007 Budget. Participants of the workshop were drawn from the banks; the telecommunications industry; food processing companies; revenue agencies; tax consultants; the Ministry of Finance and Economic Planning and the Association of Ghana Industries.

Mr Owusu said the Government had made inroads in encouraging investment and growth in the local industry in order to widen the tax net and generate more revenue.

Government's reduction of corporate tax; personal income tax; reconstruction levy and withholding tax were aimed to make the economy attractive, generate investment and reduce the level of tax rates to rope in more people.

The result has been a sustained increase in total revenue from 2000 to 2005.

"The net benefit of all the initiatives to broaden the tax net since 2001...and the impact of these measures have reflected in the growth of tax revenue," Mr Owusu said.

Total tax collected for 2000 was 4.4 trillion cedis. This increased by 51 per cent to 6.5 trillion at the end of 2001 and subsequently increased by 30 per cent to 8.6 trillion cedis in 2002. In 2003, the figure jumped by 55 per cent to 12.7 trillion cedis after which it moved up again by 32 per cent to 16.8 trillion in 2004. Mr Owusu said even though the Government could not meet its target in 2005, total revenue increased by 22 per cent to 20.5 trillion cedis. For 2006, Mr Owusu said: "I can say authoritatively that we can make the target of 25 trillion cedis because the facts on the ground point towards that."

Total tax contribution to the Gross Domestic Product averaged 21.2 per cent as at 2005 from 16.3 per cent in 2000. Mr Owusu said factors like the introduction of the tax identification numbers for use by the revenue agencies for cross-references, introduction of tax stamp and tax sticker for commercial drivers had all contributed to the sustained increase in revenue.

He said the introduction of tax amnesty granted to people, who had flouted tax laws, had yielded significant growth in revenue mobilization of funds. He cited the example of people, who made temporary importation of vehicles for onward movement to destinations outside of Ghana but ended up using them for longer periods voluntarily taking advantage to pay their tax.

Commercial banks also took advantage to make transfers of monies for stamp duties into their stated capital after which they would make subsequent payments to the Government. Mr Owusu said the next target for the revenue agencies was to embark on education to deal with lack of knowledge about tax obligations.

He said for instance some people, who paid duties on imported goods did not know that they were supposed to pay income tax on the profit made.

The Revenue Agencies Governing Board, he said, would continue to honour corporate entities that honoured their tax obligations as a form of incentive to encourage others to follow. Mr Prosper Adablah, Second Vice Chairman of the Chamber, said the research undertaken by the his outfit looked at the tax regime of countries like South Africa and Malaysia as a way of assessing countries which were at par with Ghana but had made a success of their tax regimes.

He said the Chamber made an input into the 2006 Budget, which was beneficial to Government policies towards the investment community and expressed the hope that ideas from this year's discussions would produce an appropriate paper for tax reforms in Ghana. 28 Sept. 06