Isaac Danso Agyiri, a tax expert, has urged the government to take steps to reintroduce some of the taxes that have been scrapped so far and to address the growing revenue problem and preserve fiscal stability. He conceded that, even though the E-Levy, COVID-19 Levy and Betting Tax elimination has eased a huge burden on households and businesses, it also means that the government has lost a huge amount of its revenue in a period of continued public expenditure pressure.
Now, Mr Agyiri says, policymakers are in the predicament of having to balance providing economic relief with the need for sustained domestic revenue mobilisation. “The size of the revenue gap caused by cutting these taxes makes it necessary that they should be revisited.” However, any reintroduction must be made in a more refined and efficient way, said he. “The original design of some of these taxes, he said, gave rise to public resistance that emphasized concerns over fairness and transparency. Low-income earners bore the added burden.
Mr Agyiri cautioned that simply restoring the taxes in their old state would almost certainly result in the same backlash, and emphasized that the redesign needs to be complete, and should directly address the shortcomings. “The emphasis will be on redesigning these taxes to ensure they are fair, simple and better understood by the public. “Without that compliance will continue to be a problem,” he said. He cited Ghana’s rapid development of the digital economy as one of the major opportunities for developing a tax system that is more efficient and acceptable. As mobile money and electronic transactions continue to grow in volume, he said, the digital space presents as a realistic means of mobilisation of revenue. A restructured digital tax, he said, might be enacted to protect small-value transactions while ensuring that larger-value activities contribute to the tax base properly.
Mr Agyiri also underscored the importance of public engagement and awareness as key elements in any tax policy. Poor communication about the purpose and utilisation of the scrapped taxes was one of the biggest obstacles they faced and that explains many of the complaints he faced. “Public trust is critical. Any tax must be accompanied by a clear government purpose and a statement of its purpose. This will be key to increase acceptance.” He wrote even more strongly on behalf of technologies to strengthen tax administration and make it more transparent, reduce leakages, and make matters better.
Recognising that “we’ve had an immediate positive effect because of tax relief” the government could be “morally responsible” as long as it closes the resulting revenue gap, Mr Agyiri cautioned. “If the gap is not narrowed, the government could be called upon to borrow more or spend less and both have their costs,” he cautioned. He recommended a trade-off balance, which should involve targeted relief and effective measures to raise revenue, is necessary for fiscal stability and the country’s long-run development.
Editor:
Obiri-Yeboah
