The 2018 Mid-Year review proposed an additional 35 per cent top marginal rate for taxpayers under the Personal Income Tax (PIT) regime. While this has become the main attraction, we note that the bill to amend the Income Tax Act, 2018 (Act 896) repeats an important downward adjustment in the five per cent and 10 per cent brackets, which took effect with the 2018 budget itself (see table 1).
It is necessary to note that PIT is paid by (a) employees on salaries and allowances; and by self-employed persons and partners on profits. In essence, the PIT paid is a non-corporate business tax from the perspective of these latter two taxpayers.
Whilst the proposed new 35 per cent top marginal rate makes the new PIT appear progressive—as is also the case with the increase in personal exempt threshold from GH¢2,592 to GH¢3,132—it is important to take note of the regressive nature of the downward adjustment for low-income