Ghana’s tax regime increasingly regressive – Coalition

taxThe Ghana Tax Justice Coalition, the national chapter of the Tax Justice Network-Africa, says a regressive tax is a retrogressive tool.

It said the current economic situation in Ghana continues to affect mostly the poor, a situation that calls on government to intensify its domestic revenue mobilisation efforts to meet some of the basic needs of many Ghanaians.

A statement signed by Mr Bernard Anaba of the Coalition and copied to the Ghana News Agency on Saturday, said Ghana’s revenue pot dries up rather more quickly than it is replenished.

“This compels Government to use every means possible even if unpalatable to shore-up the revenue situation sometimes without much consideration of the negative effects of new tax policies and measures on the poor and marginalised in the society,” it said.

The Coalition commended Government for the new tax measures in the 2014 budget.

The Coalition particularly welcomes Government’s intention to extend Capital Gains Tax to the Petroleum Sector.

“We wish to note that after two years of campaigning for the harmonisation of the General Income Tax Law with the Petroleum Income Tax Law to bridge a gap that was being exploited by some oil and gas companies, the Minister of Finance has finally proceeded to plug the loophole that has already caused Ghana $70million in potential tax revenue.

“The move, in our view will conserve resources to finance our budget. We also support the decision of Government to curtail the profuse tax incentive regime and review the tax exemption policies and many others.”

The Coalition also believes that an economy the size of Ghana should be generating tax revenues in excess of 20 per cent of the country’s Gross Domestic Product.

“Recently, the Government also increased the Value Added Tax (VAT) rate from its current rate of 15 per cent to 17.5 per cent, without adequate parliamentary and citizens debate.

“While we applaud any policy to mobilise domestic revenues, we also wish to employ government to guard against excessive regressive taxes such as VAT.

“Our tax system is increasingly regressive and with the 2.5 per cent VAT introduced, the tax situation on the poor Ghanaian will worsen as prices will automatically go up,” it said.

The Coalition views this as unresponsive on the part of government to the needs of many poor Ghanaians.

The Coalition sees this as an attempt to reverse the recent subsidy for utilities under a cloak of the new Ghana Infrastructure Fund.

The statement recommended that Government should consider ways of re-introducing the VAT that takes into consideration income groups, targeting the upper end consumers rather than a blanket VAT for all.

The Coalition campaigns for domestic revenue mobilisation and for citizens to pay their share of taxes for national development in a consensual, fair, transparent and accountable manner.

Source: GNA

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