Target big businesses to rake in more revenue…and lessen tax burden on consumers, says IEA
PA fellow at the Institute of Economic Affairs (IEA) has suggested to government to lessen the tax burden on consumers, and instead, target the big businesses in the country to rake in more revenue.
“The government must rather go after multi-national organisations and stop putting excessive financial pressure on consumers through consumer taxes,” Dr John Kwakye, Director of Research at the IEA, said.
He said Ghanaian governments have been ‘lazy’ in their approach of raising revenue through taxation, and “that approach must change.”
According to Dr Kwakye, imposing consumer taxes on the “already burdened” Ghanaian taxpayer was unfortunate and further deepens their economic woes.
“You must go and look for the tax from the booming sectors of the economy because in economics, the sectors that are booming are the ones generating more revenues,” he said, citing the telecommunication, banking and mining sectors.
Dr Kwakye was speaking in an interview with the Ghanaian Times on the sideline of the launch of the IEA’s research findings on Ghana’s business environment in Accra on Thursday. The research was conducted in February 2018, on the theme, “Advancing the cause for a favourable business environment through advocacy,” under the Business Sector Advocacy Challenge (BUSAC) Fund.
The survey which interviewed 200 businesses in the Greater Accra, Ashanti, Western and Eastern regions with a 89 per cent response, featured business areas, including agriculture (23 respondents) industry (58) and services (97).
It among, other things, found high cost of raw material, high cost of credit, low domestic demand (for locally made goods), high utility charges, unstable exchange rate, high taxes and government charges, excessive influx of imports, as some constraints to businesses.
Other constraints included unfavourable regulatory environment, unreliable electricity supply, difficulty in obtaining licences or permits, inadequate infrastructure, lack of skilled workers, insufficient demand (for local goods) and high rate of corruption in public institutions.
Out of the 178 businesses, 130 of them, representing 73 per cent, were optimistic that the business environment would improve within the next six months of the survey, while 42 (23.6 per cent) and six (3.4 per cent) expected no change and a worsening business environment respectively.
“The way to ease the burden of high taxes and charges on businesses is to address the lapses in the tax system, including expanding the tax base, checking incompliance, reducing exemptions and plugging the numerous tax leakages,” the report recommended in relation to taxation.
Dr Kwakye said tax leakages and exemptions “given to NGOs, parliamentarians and government officials,” which he said amounted to GH¢5 billion in a year, if reduced, would be save Ghana more for development.
On leakages at the port, he said “people bring in goods and they under price the value, so that they could pay less tax” and other infractions, and “we are saying that, if you were to plug all these loopholes, you raise a lot more revenue such that it would not be necessary to increase taxes for overburdened consumers.”
BY JULIUS YAO PETETSI
