By: Okine, Enoch
I will take this opportunity to welcome you as the new Commissioner-General of the Ghana Revenue Authority and to congratulate you not only for the appointment, but for what you bring to the table: your honesty, tenacity of purpose and commitment to our mother Ghana. Your close associates have a high level of confidence in you and they think you are the right person for the job. By way of support, I have few suggestions to make. Suggestions that I believe, if pursued, will help achieve the goals and objectives of the GRA and help the government fulfil its promises to the citizens.
In the first place, you will not achieve much without a functioning national identification system, and a reliable address system in Ghana. You may also need a legal cover to pursue some of the programs I am proposing. However, I will point to ideas within your reach that you may deal with immediately to impact government revenue. The suggestions below may be key, coming in the wake of the various VAT, and import duty abolishment by the government. The government must get its revenue from somewhere else, and I believe it must be income tax.
The first is based on the age-old concept of widening the tax net. Getting all Ghanaians, particularly from the informal sector, who earn income to pay income tax. Those who are not paying at all and those who are not paying the right amount should pay up. To this extent, filing tax returns must be made mandatory for all income earners. Anybody who works or performs service, whether directly or indirectly, and earns revenue, or income should be required to file income tax returns. Income by way of rent, sale of home and other properties must be reported. Head porters, consultants, and several others must all be required to file tax returns and pay tax as appropriate. Other income earners including market women, street hawkers, drivers, car owners, drivers’ mates, construction workers must all file tax returns. It should also include even those in the formal sector who have jobs to be educated to report all income. They should be made to file their tax returns whether they make profit or not. They will only pay taxes however, if they make profit (with few exceptions) above the required threshold. The filing requirement will even aid collection of property taxes and payment of health insurance premiums. For this requirement to be implemented successfully, there must be repercussions for violators.
In the same way that the GRA made Tax Identification Number mandatory for clearing goods at the various ports of entry, Ghanaian workers must be compelled to file their tax returns before they can enjoy specific government services and programs. They and their family may not be enrolled in public school system especially the universities, cannot own nor occupy a store or shed at our market centers, cannot register any real estate property and cannot be allowed to enjoy other similar government services.
In addition, I will encourage you to introduce a third-party reporting system. Any employer who pays workers as employees or contractors must report such salary and wages on a form that will be reported to the GRA and a copy given to the employee or the contactor. This will form the basis of these workers, filing their own tax returns. Since employers in Ghana report income to SSNIT but most report different information to the GRA, the GRA must collaborate with the SSNIT to receive the same report for tax liability determination. In the same vein, salary and wages expense on the employer’s profit and loss statement can only be accepted if supported by this income report. There are so many other forms that you could introduce or simplify to aid tax filing and collection.
An area that will be difficult to deal with, but if managed efficiently could increase government revenue almost immediately and significantly is GRA audit. Corruption in this area is so enormous, I am surprised “Anas” has not visited them yet. It is common that employers connive with GRA staff to deny government of expected revenue. What makes it difficult to deal with this is that most of these employers have political heavyweights behind them, or are political party financiers themselves. The GRA auditor will not be forthcoming if he does not see the political will at the top. Meaning if they see commissioners and supervisors allow power brokers, business executives, politicians and other leaders get away with not filing and paying taxes, to protect their own jobs and safety, the GRA auditor will end up playing along. That is how corruption gets entrenched. Addressing this problem will require the support of the president himself. A note of caution from him to all politicians and other power players, will go a long way to address this problem. I know the president will provide you with that support and cover.
This is my recommendation though, get a private international audit firm to audit the GRA auditor. Get them to pick few GRA audits at random, from various categories of taxpayers or businesses and audit them. This move alone will increase revenue. If any auditor is found to be fraudulent, the punishment must be steep and without favour. They should either be fired, have their entitlements revoked, huge penalties levied, or the officer’s property(ies) confiscated to pay for the penalties as the law will require. Government revenue is a life and death situation and must be treated as such. This move will direct all political pressure on you, and this is where your training, values, tenacity of purpose and selfless commitment to mother Ghana will come to play. May God, bless you.
The above policies, if pursued successfully, will get all income earners to file tax returns, which will increase government revenue. It will also create a lot of jobs, meeting government promises of job creation. A lot of jobs created for tax preparers, accountants, GRA officers, software providers, office managers, tax professional schools and others will be needed to support the system. This could lead to the expansion of postal service and other areas of the economy. Credit management and metropolitan and district assembly financial management will all be enhanced.
Mr Kofi Nti, there are numerous other programs you may pursue to help government achieve its goals and promises, but please we may start from here. I wish you success.
By: Enoch Okine, MSA, EA
Tax Accountant, USA