“In the private sector, there are no significant underpayments of income tax among firms which filed Pay As You Earn (PAYE).”
The survey attributed the underperformance of tax collection in the public sector to the difference between the reporting system to the Ghana Revenue Authority (GRA) between the private and public sectors.
The study was conducted by World Bank in collaboration with the International Monetary Fund and the GRA.
Speaking at the presentation in Accra on Tuesday, Mrs Tomomi Tanaka, Senior Economist, World Bank said the private sector firms listed all the workers and their wage incomes and reported how much they withheld from each worker.
However, she said in the public sector, the Controller and Accountant General’s Department sent one cheque to the GRA for all public sector workers, making it difficult to verify how much each public sector worker earned and how much income was withheld from them.
Mrs Tanaka said the underpayment of income tax in the public sector resulted not only from lack of transparency, but also from the existence of ghost workers in the sector.
The survey revealed that the income tax revenue from the private sector rose by 267 per cent during the period of 2011 and 2014, but in 2016, the tax revenue from the private sector declined while it improved in the public sector.
She explained that income tax revenue slightly declined from 2014 to 2016, because the tax collection from the private sector declined substantially due to changes in the tax rates, the election cycle and the electricity shortages.
The Senior Economist noted that majority of income taxes were paid as PAYE, which required that employers remited the deducted amount to the GRA, adding that not all firms were registered with the Authority.
She explained that not all firms and organisations which remit PAYE to the GRA send the full amount of income tax due.
Mr Tanaka said in 2014, the total tax revenue in the public sector was only GHȼ461 million, lower than the projected total tax revenue for the year.
She said in 2014, PAYE was filed for 1.1 million wage earners by private sector firms, while the business census-Integrated Business Establishment Survey suggested that there were 1.4 million workers who work for private sector firms registered with the GRA.
The report also suggested that Ghana’s tax collection was low compared to other lower middle income African countries.
“Raising tax revenue is an urgent issue in the country as government has been suffering from a widening fiscal deficit and a rising debts burden, the country lied below the trend lines for all major taxes, that is value added tax, corporate tax and income tax,” she said.
She called for improved transparency of payments to public sector workers and improved database to allow more precise estimations of revenue targets and tax gap.
Professor Godfred Bokpin, Lecturer, University of Ghana Business School urged government to make good use of technology to enable Ghanaians and all who matter to pay their taxes in the comfort of their homes to increase government revenue and reduce long queues.
He urged government to up their operations and address the problems associated with tax exemptions, non-compliance of tax and the illicit financial flow to get more revenue for the country.
Mr Charles Addae, Acting Commission, Research, Planning and Monitoring of GRA encouraged all to pay their tax to enable government to undertake its developmental projects and lauded the introduction of the Ghana Card which, he said would help identify individuals and organisations for tax compliance.