Block revenue leakages so you can achieve revenue targets- ILAPI to govt

Policy think tank Institute for Liberty and Policy Innovation (ILAPI) has reacted to the mid-year budget review which was presented by the Finance Minister Ken Ofori- Atta

Among other things the Finance Ministwr announced that the government was targeting total revenue of GH¢96.842 billion against GHS 135.742 billion total expenditure creating a deficit of GHS 38.9 billion.

Per the details provided, the deficit would be financed from both foreign and local sources.

The report also highlighted key measures to improve the collection of tax revenue to the Government.

The measures to be used include Electronic collection of VAT effective 1st October 2022;
Improved collection of Property Rate by local government and assemblies; Upfront payment of VAT for importers who have not registered for VAT; and Extension of Waiver on interest and Penalties to December 2022.

Reacting to these, ILAPI described the measures as a step in the right direction towards expanding the tax net.

It however advised the government to block all leakages in revenue mobilisation if it wants to achieve the targets.

“The above measures are a step in the right direction towards expanding the tax net and improving tax revenue. With that being said, the Government should take additional steps to close the leakages in revenue mobilization. The recent report by Ghana Integrity of Public Services Survey (GIPPSS) indicated that Ghana lost approximately GHS 5 billion in cash through the payment of bribes to public officials.

With the Ghana Revenue Authority (GRA) custom division ranked third on the list, it is apparent a lot of work has to been done to close the leakage in the system. To have the GRA as part of the leading bribe takers and corruption related activities, it depicts that revenue leakages would be difficult to tame.”

Read the full statement below

Inflation: A simple Tax Analysis on the 2022 Mid-Year Budget | ILAPI

The mid-year budget delivered by the Finance Minister highlighted the current economic situation and the various mitigation plans the Government is putting in place to ensure robust economic system. The budget largely blamed the Ghana’s economic woes on Russia-Ukraine War, disrupting global supply chain systems. However, the Government believes that the GhanaCares “Obaatan Pa’’ programme will be a game changer, by ensuring macroeconomic stability, debt sustainability and robust growth.

Government is targeting total revenue of GH¢96.842 billion against GHS 135.742 billion total expenditure creating a deficit of GHS 38.9 billion.

According to the report, the deficit will be financed from both foreign and local sources. The report also highlighted key measures to improve the collection of tax revenue to the Government. These measures are highlighted below:

Electronic collection of VAT effective 1st October 2022;
Improved collection of Property Rate by local government and assemblies;
Upfront payment of VAT for importers who have not registered for VAT; and
Extension of Waiver on interest and Penalties to December 2022.
The above measures are a step in the right direction towards expanding the tax net and improving tax revenue. With that being said, the Government should take additional steps to close the leakages in revenue mobilization. The recent report by Ghana Integrity of Public Services Survey (GIPPSS) indicated that Ghana lost approximately GHS 5 billion in cash through the payment of bribes to public officials.

With the Ghana Revenue Authority (GRA) custom division ranked third on the list, it is apparent a lot of work has to been done to close the leakage in the system. To have the GRA as part of the leading bribe takers and corruption related activities, it depicts that revenue leakages would be difficult to tame.

The Government however, has relied on taxation as post-covid economic recovery policy by introducing the COVID-19 Levy of 1% on all taxable supplies. This has increased the effective tax rate on taxable supplies to 19.25%.

The Government has also increased the VAT flat rate to 4%. In addition, Government introduced sanitation and pollution levy of 10p per litre of petrol/diesel and 20p litre petrol/diesel as energy sector levy.

Typically, most taxes are passed on to final consumers. For instance, some businesses pass withholding tax burden on consumers in the form of high prices. It is not surprising inflation has skyrocketed to 29% in June 2022 representing the highest rate since December 2003, worsening the woes of ordinary Ghanaians. Sadly, the salaries of most consumers have not been adjusted to accommodate inflation. Therefore, this phenomenon has negatively affected consumers’ purchasing power.

In addition, the introduction of E-Levy has come at a time where businesses are still recovering from the shocks of COVID-19. Of course, businesses will pass the cost of E-Levy on final consumers by raising prices.

Though the E-Levy is claimed by government to be an innovative way of raising revenue to the, it appears it has added additional burden on producers and manufacturers, who in turn, have passed the tax burden on final consumers in the form of high prices.

In conclusion, the high inflation we are witnessing today could partly be attributed to the new taxes the Government has introduced over the years while hiding under the effect of Russia-Ukraine War. Apart from Government focusing on revenue generation, it should also look at measures to ease the cost of doing business.

To fight inflation, it is therefore imperative for the government to recaliberate the tax codes and subtly change the tax system to faciliate business growth and SME transition for economic development. To do this, businesses would need fewer tax codes and taxation should be the one that should drive for businesses to thrive and not to take enterprises out of business.

To fight inflation, it is therefore imperative for the government to recaliberate the tax codes and subtly change the tax system to faciliate business growth and SME transition for economic development. To do this, businesses would need fewer tax codes and taxation should be the one that should drive for businesses to thrive and not to take enterprises out of business.

ILAPI

Tema

0244169361

By: Rainbowradioonline.com/Ghana

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