The Issue Of Tax
The fact cannot be denied that governments the world over can only have their source of incomes to run business through taxes, levies and commissions. However, from time immemorial, the word tax seems to give some unpleasant and uneasy feelings to the very people it is meant to serve, and the Jews are good examples, who classified all tax collectors as condemned sinners.
So it was, when the announcement came about the presentation of a mid-year review of the budget, and Mr. Gabby Otchere Darko threw in a teaser to ask what if the Value Added Tax (VAT) rate will be increased to support social intervention programmes like the Free Senior High School (SHS) and medicare.
All hell broke loose, and the opposition went wild in preparation to attack and destroy the government if it dared increase VAT by even a percentage point of the figure 1.
What saddened many hearts was when the IMANI gurus served notice to resist the government's efforts in its developmental programmes, if it ever increases VAT to achieve such. So, if the government was to increase taxes to improve upon conditions of Ghanaians, Franklin Cudjoe and Co found it unacceptable.
Surprisingly, they attacked the idea of funding the Free SHS, insisting that it was the government's problem and so it must solve it any how it can, but not from increased taxes.
Coming from people who understand the benefits of education, the attack on the Free SHS was rather shocking, to say the least. Many, otherwise, brilliant youth get missing out along the way and end up doing menial jobs with very minimal taxes paid into government chest.
So, how can we, as a nation, rise up to become a middle income earning country if almost two thirds of the working population are either stake illiterates, semi-illiterates, or just not adequately educated enough to handle middle management jobs?
With such an arrangement, the lower class becomes the largest, with, at least, 60% of the population, whereas in some countries the middle class takes up more than 70% of the population and are ever content with paying their taxes.
It came to pass that after all the beating of war drums, the Finance Minister came out with a very good strategy of raising more revenue for government without increasing VAT. And, again, the economists from the opposition thought otherwise: VAT has been smuggled in through the back door, they claimed.
They went on with mathematical calculations to explain how, with no increment of VAT, some declaration of a tax component as flat rate meant the government was generating more revenue than before at the expense of the consumer.
So, are we being told that the government should not raise revenue anymore?
In all this, no one has thought of the fact that more than 60% of the working class do not pay any taxes, and also, our loose and compassionate laws allow many more to evade taxes with such impudence. It seems those who judiciously and religiously pay their taxes are workers on pay roll in the government and public sectors. And many other voluntary tax payers have their taxes embezzled by local authorities, who go down to the market and public places to collect taxes.
It would be suggested that the Ghana Card must be made for other use here in tax collection. With an e-application installed onto the card, which will be able to determine the tax payment status of the holder, anyone who pays his or her taxes would show when the card is swapped on a machine.
Then, everybody, most especially the voluntary tax payers, i.e., those who sell at the markets, on the streets, in the lorry terminals, at the corner shops and the artisans and other informal workers, traders, manufacturers, businessmen and women etc., etc., should be made obliged to pay their taxes electronically into an account number provided.
Immediately a tax component is paid, it should reflect on the Ghana Card. And with no physical cash involved no taxman can issue out fake receipts and embezzle the money. The taxman's job will only be to check on the Ghana Card, the holder's tax status and persecute accordingly any non-payment.
The intention behind this is to spread the tax net to cover everybody who does business or any transaction at all levels. With this achieved, all taxes can be reduced drastically to make them very affordable, for when anyone pays what he or she does not feel, it becomes very easy to pay. For example, if the fishmonger, table top seller and the street food seller are made to pay a flat rate of say GH¢5 a month, one can imagine the amount of money to be raked in every month if they total about two million five hundred thousand across the country – GH¢12.5 million or about $2.6 million. Pure water sellers and others could be pegged at GH¢1 a month, and with a million of them providing GH¢1 million.
When revenue from such taxes is used to address some immediate needs of society, no one will complain.
The importance of free education can never be over-emphasised here, and a tax component must address that. So, everybody, whether you have a child or not, will pay for the free education of the Ghanaian child.
Meanwhile, let those who are still calculating to find out whether the VAT rate has been increased continue in their exercise, while the government continues to provide for the people and make good its promises.