The Ghana Revenue Authority (GRA) would soon take legal action against the various Metropolitan/Municipal and District Assemblies for defaulting in the payment of 5% withholding taxes.
Mr. James Dabuo Kan-Ezumah, Chief Revenue Officer of the Techiman Small Tax office said this at a Brong-Ahafo Regional Tax Power campaign held in Wenchi. It was organized by Resource Link Foundation in collaboration with ACTIONAID Ghana.
According to Mr. Dabuo, the various Assemblies owe the GRA over GH?48 million across the country and that it was time legal action was taken against them to retrieve the amount.
He explained that the 5% withholding tax is supposed to be collected by the Assemblies from contractors, and other firms on behalf of the GRA, which should be paid on or before the 15th of the month following the month collection was made.
Mr. Dabuo continued that the failure to pay the amount at the exact date attracts a 20% penalty and if it is over a period of three months, the penalty is 30%, which the various Assemblies are aware but have flouted it with frivolous excuses.
He indicated that the Assemblies would be given a minimum of two weeks to mobilize the amount and pay, but if they fail to comply, legal action would be taken against them.
On his part, the Director of Resource Link Foundation, Mr. Christopher Dapaah noted that low level of technical capacity for revenue mobilization and management coupled with harmful and illegal practices has been the bane to effective revenue generation in Ghana.
According to him, the weaknesses in the revenue mobilization system lead to a lot of revenue leakages, and hence the resources available for public investment are reduced.
He said these challenges constrain domestic resource mobilization at all levels and force the country to rely on external financial support as well as foreign direct investment as the principal sources of funding for both public and private sectors.
Mr. Dapaah disclosed that a research conducted by ACTIONAID Ghana in collaboration with other Civil Society Organizations in the Tax injustice campaign revealed that, Ghana loses US$1.2billion every year through Tax incentives, and from the year 2011 to 2013 alone, Ghana lost US$70milion in the oil and Gas sector due to imbalances in tax policies.
He continued that the situation is worsened by the absence of a well-defined policy framework and strategies leading to consequent revenue generation problems, such as the inability of the Ghana Revenue Authority (GRA) to expand the base of existing revenue sources, the identification of new sources of revenue and the ineffective administration of collection systems.
Again the Director of Resource Link Foundation noted that GRA may be constrained by deficiencies in basic revenue management systems including non-update of tax registers, ineffective identification of tax payers and the absence of modern billing and collection systems.
However, he indicated that while GRA might have experienced some alternative modes of revenue mobilization, the lack of capacity, clear guidelines and absence of technical support could have prevented these isolated efforts from being replicated successfully and to achieve its targets.
He said, another biggest challenge on revenue loss is illicit financial outflows including the proceeds from illicit activities such as corruption, criminal activity, and the proceeds of licit business that become illicit when transported across borders in contravention of applicable laws and regulatory frameworks in order to evade payment of taxes.
Mr. Dapaah suggested that for Ghana to be free of illicit financial flows there is the need for independence in policy formulation and funding that will transform the development of the economy and bring coherence into its fiscal and macroeconomic options.
He added that the concept of illicit financial flows should include the impact of such activities of Ghana’s pro-poor production and development, particularly on the small holder farmer and Ghanaian worker.
