Key priorities that government must pay attention to the Ministry of Finance puts finishing touches to the 2019 budget statement and economic policies include: domestic revenue mobilization, revisiting tax exemptions to multinational corporations, increased spending in the health and education sectors to reduce inequalities, enhancing the operations of the Ghana Revenue Authority, job creation, and investment into agriculture sector.
CUTS Ghana, a research and advocacy public policy think based in Accra responded to the call by the Ministry of Finance to make inputs into the 2019 budget and economic policy for the government. The key highlights are as follows:
- Enhance tax effort by: clamping down on tax exemptions and deductions; increasing petroleum sector corporate tax rates; fighting tax dodging more effectively; and renegotiating tax treaties to allow higher withholding taxes, capital gains taxes and taxes on dividends.
- Make the design of tax system more progressive by: increasing taxes on capital gains, inheritance and gifts taxes to match income tax rates;
- Make tax collection more progressive by: sharply increasing the proportion of taxes coming from personal and corporate income tax (by reducing exemptions, deductions and dodging), and capital gains/property/wealth taxes, ending taxes on cocoa exports, and increasing excise duties on bottled water and soft drinks.
- Automate all toll roads and give incentives to cars that make pre-payment using electronic pass. Motorist can top up at the bank or use mobile money platform. This will prevent fraud and revenue leakages.
- MMDAs across the country should maximize their efforts in raising revenue from property taxes and have the same spent on three key sectors-educations, health and sanitation.
- Reclassify PAYE Schedule:We propose that those earning GHS 10,000 be rather taxed at 30% instead of the current 35%, whilst those earning GHS 14,000/per month be taxed 35% and finally, income exceeding 18,000/month be taxed at 38%.
GHANA REVENUE AUTHORITY
- Investment into the Operations of Ghana Revenue Authority: The ability of the country to rake in more revenue depends upon how the revenue authority is resourced. Deployment of technology and proper harnessing of data can help GRA close-in on tax evaders. With the full implementation of the TIN, PAYE payers should be able to know much their employers have paid on their behalf.
- GRA should develop an online platform which requires all companies paying their employees’ salaries upload it unto the GRA system for validation. This validation would allow people working in multiple places to pay the correct tax rate instead of only paying 7.5% withholding on their remaining jobs
- Formalize the Informal Artisanal Sector for Tax Purposes: About 95% of houses built in the country are built by people in the informal sector. These plumbers, masons, painters, carpenters and electricians take money and do not pay taxes to the state. To help ensure that informal artisans pay at least 7.5% taxes on their services, the burden should of compliance must be shared between the property owner and the artisan. All approved building permit must alongside with GRA Activity Log Book which would mandate all building owners to log in correctly every activity/work done( date, activity/work done, name of artisan +plus the TIN number, amount paid to the artisan and the 7.5% withholding tax). If the property owner fails to ensure the deduction, a standard rate will be applied and the owner shall be responsible for paying the tax. To be able to apply for electricity. GRA must clear the property of artisan withholding tax compliance before ECG or GWCL can supply water to the house.
- Maximize Revenue from Property Rates: According a research undertaken by CUTS Ghana, most MMDA does not have operational capacities to access, rate and collect property rates. Going forward, MLGARD, should consider allowing GRA or private firms collect the rates.
- GRA must make the payment of taxes more friendly. Businesses should be able to make payment online, bank transfer. Taxi and commercial cars can also pay with mobile money and GRA can arrange dispatch riders to deliver their receipt and stickers to them.
- Tax Exemption for Multinationals should be tied to how the operations of the firms lead to the attainment of SDGs (at least 10 goals). This means that tax exemption should not be granted at the onset. The bulk pack should be spread over the years, and once the company meets the criteria, then it can deduct the exempted amount from their tax liability.
- Tax exemptions should not be given to multinational firms in a sector where there are existing local players/competitors. This is to ensure competition and level playing field.
- Tax exemptions should be linked to sustainable job creation and must past the SMART test.
- Ban/Freeze on Sitting Allowances Sitting allowances should only be restricted to those are not on government payroll, eg. Assembly members. If a government employee attends a meeting during office hours, there should be no sitting allowances.
- Remove of Special Petroleum Tax: Government must consider removing Special Petroleum Tax on petroleum products to lessen the impact of the exchange rate vulnerabilities on consumers.
AGRIC SECTOR AND HEALTH SECTOR
- Government to consider establishing Pension Scheme for Cocoa and Coffee Farmers across the country will can bring about income security in their old age or in times of poor crop season. The pension scheme should be based on contribution and government can withhold part of the producer price to fund the same.
- Food Security To ensure constant supply of food to major towns and cities, government should consider investing in a form of food distribution companies. Their operations should be data driven, to ensure the optimal distribution of food across major cities. The activities of market queens and food aggregators sometimes border on cartelization which distort the prices in the market especially Accra, Tema and Takoradi.
- Increase NHIS premium for the informal sector to reflect the rising cost of healthcare and to prevent the scheme from collapsing. This will reduce out of pocket expenses. Currently, the NHIS card best serves an ID card than an insurance card.
**Editor Note: CUTS is a public policy research and advocacy think tank working in the areas of consumer welfare, competition policy and law, economic regulation, trade and development, good governance and public finance. For more information contact: [email protected] or 024.392.0926 or 0302245652.