IRS launches New Tax Stamp
Accra, Jan. 18, GNA - The Internal Revenue Service (IRS) on Wednesday introduced a new tax stamp as a strategy to optimise revenue generated from the informal sector.
The new tax stamp targets low income business operatives such as hawkers, tabletop shops, mobile-to-mobile operators, among others. Under this system self-employed businesses within the various categories would make a quarterly upfront payment ranging from a minimum of 50,000 cedis to a maximum of 250,000 cedis and would be issued with stamps that must conspicuously be displayed at their business premises. Launching the new tax stamp, Mrs Janet Opoku-Akyeampong, Commissioner of IRS, said the introduction of the stamp was to ensure that a greater proportion of businesses within the informal sector were captured into the national tax net.
She said out of the economically active group of nine million, employees on "PAYE" (Pay As You Earn) are about 1.2 million leaving 7.8 million active people in the informal sector.
"If cocoa farmers' income is exempted and income earners whose incomes are below the threshold are estimated to be 4.8 million, at least three million people in the informal sector are liable to pay income tax, but regrettably only 191,000 have registered with the IRS."
Mrs Opoku-Akyeampong said even those who had been registered made a meagre contribution of five per cent annually due to nefarious deals such as non-submission of tax returns and under-declaration of income. She expressed optimism that with the introduction of the stamp system the abysmally low performance of self-employed persons would be curtailed to broaden the revenue base.
Mrs Opoku-Akyeampong said in the first quarter of this year, revenue expected from the tax stamp was estimated to hit 217.500 billion cedis and an annual tax yield of 870 billion cedis.
She said IRS learnt a lot of lessons from the GPRTU daily income tax system where the tax was paid to the Executives, who did not render proper accounts to the Service.
She said in 2002, GPRTU collected 10.875 billion cedis, but when IRS took over and introduced the Vehicle Income Tax in 2003, the collection increased to 30.103 billion cedis in the third quarter of 2003 and as at November 2004 42.154 billion cedis had been collected. Mr Kweku Agyemang-Manu, Acting Deputy Minister In-Charge of Finance, noted that the development of the country's infrastructure greatly hinged on the voluntary payment of taxes by business enterprises.
He said over dependence on foreign aid and investments had far-reaching repercussions such as external shocks and donor fatigue and thus it was important for revenue to be internally generated.
"These shocks combine to put a brake on a nation's own development efforts. It is time for us to look within for a more sustainable development."
The Acting Deputy Minster said with the informal sector constituting 80 per cent of economic activities, the potential revenue generation from the area was great and tapping it would help to short-circuit donor dependency.