EDITORIAL: Re: President Mahama has filed his taxes
The story that President Mahama has filed his taxes (April 2, 2013) is a
welcome indication of the change in attitude of our President, and worthy of
emulation. Action speaks more than words, as the saying goes.
The key issues, though, are for the President to ensure that the laws of the
land are adhered to and there is discipline in the system enough to punish
those who don't file their taxes, or file false taxes. It is common
knowledge that Ministers, Parliamentarians and Government executives are
taxed on only their base pay, which may be in the range of $48,000 to
$84,000 but earn more than $100,000 an average for cash payments in
envelopes for attending meetings, travelling and conferences. Why are these
not taxed? MIT and Harvard Professors Acemoglu and Robinson have described
these as "extractive" political and economic institutions, which we will
call a system where people in power take the lion's share of the meat,
leaving the bones of society to the Ghanaian masses.
The President has shown a good gesture and what we recommend is for him to
go beyond symbolism. Let the axe fall where everybody will file their taxes.
The idea of charging gargantuan taxes of 45% to 200% on imported vehicles
and items depletes cash capital at the very entry point to Ghana, and
creates great entry barriers for those who could use the capital to start a
business. It also creates high inflation as small vehicles, tools and
machinery are sold at many times the salary of the worker or small business
person, and merchandise and produced goods will have to be raised in prices.
High import tariffs also become a disincentive for other taxes and makes it
very unattractive for some to invest their capital. In addition there is
the feeling that people have already paid their taxes in duties and VAT and
NHIL at the ports and hence even property taxes are ignored or very
inadequate to meet local developmental needs.
For those not aware, new tax ID numbers are given for every import, as we
have verified. Taxes and ID numbers are not related to any retirement or
other social benefits. What is the incentive in paying taxes, then, if
government cannot deliver or allow private companies to produce and deliver
utilities such as water and electricity, and build roads and highways and
sewage systems we all need!
We strongly recommend to the President to go beyond the showmanship of
paying his taxes.
(1) He should make Ghana's tax payments be recorded in a database for each
individual according to his national ID number, and tied to retirement and
other benefits.
(2) He should demand that every public official, as also private income
earners, pay their taxes by a certain date or be in violation of the law and
some penalties added.
(3) While taxes are personal, we believe that public officials' salaries,
assets and taxes should be a matter of public interest. As such annual asset
and income filing should be enforced.
(4) We also recommend that all income and benefits including petrol
allowances, housing, vehicle and food allowances during travel, or any other
benefits in cash should be counted for tax purposes.
(5) Lastly, we recommend that the President should pay his taxes on his base
income just like all citizens, and not be exempted. The President should
share the pain of the ordinary person in Ghana. Lastly we recommend that
(6) No public official should have taxpayer funds used to build water
reservoirs and Power Generators. Let them bear such cost and share the pain
of the society.
Dr. Kwaku A. Danso, Email: dansojfk@gmail.com
President - Ghana Leadership Union (NGO), Moderator-GLU and GLF Forums.
Author: Leadership Concepts and the Role of Government in Africa: The Case
of Ghana
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