A TAX consultant, Mr Ali Nakyea, has urged the Ministry of Finance to review the 30 per cent personal income tax band, which was introduced in the 2019 budget.
Considering that corporate tax currently stands at 25 per cent, he said the 30 per cent tax on income earners of GH¢20, 000 and above meant that the government was now taxing individuals more than companies.
Mr Nakyea said that at the 2019 KPMG Budget Forum, which was held on November 19, this year, in Accra.
The government in the mid-year review of the 2018 budget introduced a new 35 per cent tax band for income earners of GH¢10,000 and above, however, after a public outcry, the ministry decided to review it in the 2019 budget to 30 per cent for income earners of GH¢20,000 and above.
Mr Nakyea is, however, asking the government to scrap the new band by allowing all individuals to pay 25 per cent across board.
“The government must take a second look at this tax policy because what it means is that we are taxing individuals more than companies and taxing them as high as mining and petroleum companies, which also pay 30 per cent,” he explained.
“Companies in the hotel industry are paying 22 per cent; free zones companies are enjoying 15 years tax holiday and after that pay 15 per cent when they sell in the local market and eight per cent when they export so asking individuals to pay 30 per cent is not fair,” he stated.
While praising the 2019 budget for the tax measures that were introduced, he urged the government to ensure there was strict compliance of the tax laws rather than introducing new taxes.
“The budget has very good growth measures for revenue and we need to ensure compliance in order to rake in the necessary revenue,” he stated.
On the conversion of the GETFUND and NHIL into straight levies, Mr Nakyea said the government should have ensured strict compliance of the existing tax law rather than converting these levies into a straight one.
“Compliance is a key challenge. I will accept any tax changes only if there is enough proof that all efforts at ensuring compliance have been exhausted and we still have gaps to fill,” he pointed out.
The tax consultant also noted that there was an issue with the Ghana Revenue Authority (GRA) Act (791) which was introduced in 2009.
He said it was time for the government to look at how tax administration had fared under the Act and undertake reforms.
The Vice-President of the Association of Ghanaian Industries (AGI), in charge of SMEs, Mr Humphrey Ayim-Darke, for his part, said the 2019 budget of the government was audacious because it presented six strategic pillars upon which the economy would be built in 2019.
He also asked how the numerous revenue mobilisation strategies and measures would be achieved.
“How achievable are these strategies, how fast can these strategies be deployed to complement the cash flow of the government to execute the audacious projects outlined?” he asked.
Going through the measures, he said what caught the eye of the association was the desire to expand the tax base using the tax identification number (TIN).
He said the association was only concerned with how accessible the TIN would be to the average Ghanaian, given that it had become the panacea for most activities and social engagements.
Equity contribution for 1D1F
Based on the estimates for Mr Ayim-Darke also appealed to the government to provide equity contribution for its one district one factory (1D1F) policy.
“We are seeing a lot of investments in social programmes, the agriculture sector and the creation of markets for agriculture products but there is no direct investment in the 1D1F project where value will be added to the products,” he stated.
“If we don’t give that support and expect the private sector to put in the 100 per cent equity, it would be difficult,” he added.
He also pointed out that the conversion of the GETFUND and NHIL into a straight levy was a disincentive to players in the manufacturing sector and would subsequently affect the 1D1F project.— GB