The GRA leads government's revenue mobilisation efforts
This article is to discuss the logic behind the setting of targets by the Ghana Revenue Authority (GRA).
A target by definition is an objective to which efforts are to be channelled into its realisation. A target typically lies within the ambit of the official or body tasked to achieve it. They employ strategies and actions to at least meet the targets.
Examples of fields and/or departments which usually work with targets are Marketing, to bring in a certain number of clients; Sales, to sell a number of a business’ products and Management of institutions, to rake in an amount of revenue or reduce expenditure to a certain level, all over a specified period.
The GRA, on the other hand, is a government institution under the Ministry of Finance comprising of three (3) agencies namely the Domestic Tax Revenue Division (DTRD), responsible for collecting and accounting for taxes from individuals and businesses in the country and monies made by Ghanaian outside the country; Customs Division (CD), tasked with the obligation of collecting and accounting for taxes on goods transiting the ports, borders and entry points of our nation; and lastly the Support Services Division (SSD) which has the responsibility of providing services underpinning the activities of the other two (2) agencies.
It was established in 2009 as a merger of the three existing revenue agencies at the time, the Customs, Excise and Preventive Service (CEPS), the Internal Revenue Service (IRS), the Value Added Tax Service (VATS).
Its core mandate is to ensure maximum compliance with relevant tax laws to secure the requisite amount of revenue due to the government from individuals and entities, called Taxpayers, through employment, investment, business and movement of goods across our borders. They do so by assessing the economic activities of taxpayers within a period and apply certain rates espoused in the law estimating the tax for collection. This means the GRA’s revenue generation is solely dependant on taxpayers engaging in investing, financial and/or business activities within a given period. The GRA must therefore be highly concerned about the operations of citizens and targets set parallel to that.
The GRA surprisingly sets targets outside the undertakings of taxpayers. Targets for 2016, 2017, 2018, 2019 and 2020 are GHS29.00bn, GHS33.43bn, GHS39.80bn, GHS42.08bn and GHS47.25bn respectively with year on year percentage increments of 13.25% (2016-2017), 16.01% (2017-2018), 5.42% (2018-2019), and 10.94% (2019-2020). Meanwhile, the Gross Domestic Product (GDP), a measure of the economic activities in the country hasn’t seen commensurate increment to the GRA’s target. The GDP for Ghana for the years 2016, 2017, 2018, 2019 and 2020 are $55.01bn, $59.00bn, $65.56bn, $67.08bn, $50.00bn respectively with related year on year percentage movements of 7.25% (2016-2017), 11.12% (2017-2018), 2.32%(2018-2019), -25.46% (2019-2020). Is it that the targets are based on the whims of the GRA’s leadership? Ideally, the practice of the GRA should be to analyze the operations of taxpayers, estimate the tax due and then set a target to retrieve.
Meeting the GRA’s targets means they will be cumulating more than it is supposed to, by probably circumventing the rules of engagement while the taxpayers are exploited to lose some of their capital, principal or earnings with them not been conversant with the tax laws and its workings. Besides, most of the taxpayers cannot afford a consultant for mediation and even if they can, poses as an extra cost eating into their profit.
The law, its application or structure works to the disadvantage of the taxpayers. Take withholding tax for eg… Clients to taxpayers are charged as agents of the GRA to withhold a percentage of payments to be made and then remit to the GRA. They, in turn, will issue a certificate to that amount for the agent to pass on to the taxpayer to defray his/her annual tax liabilities. This is an unnecessarily burdening lengthy link for the taxpayer to receive what is due them. There have been many instances where the GRA do not issue the certificates on time, the agents do not remit the taxes to the GRA, do not follow up on the certificates to pass on to the taxpayer or misplace the certificate if they fetch it. Another challenge is that of collection. If the taxpayer has clients scattered across the country, fetching the certificates becomes tedious as the GRA rejects soft or printed copies of them. The taxpayer is made to bear the liability of unretrieved certificate(s) whether it is his/her fault or not.
Another drawback to the tax laws is where tax liabilities (unpaid) are slapped with hefty fines and required to be paid immediately, while a tax credit (overpayment) is accrued for at least a year, attracting no interest.
This practice does not portend to the economic benefit of taxpayers which might lead to their collapse, having a rippling effect on employees, families and the country at large. It will also create mistrust between citizens and the GRA explaining why many businesses, especially those in the small to medium scale sectors, are hesitant in registering with the GRA whiles individual taxpayers do not divulge their investments, all these tending to be detrimental to national development.
The Ghana Revenue Authority must therefore work at projecting themselves as having the interest of taxpayers at heart. They should assist taxpayers in streamlining their activities to yield maximum results leading to more revenue yielding to the country.
