Proposed tax measures in the mid-year budget review
The focus of the government’s economic management is to shift emphasis from taxation to production to stimulate growth in the private sector as well as to accelerate job creation and prosperity, Mr Ken Ofori Atta stated.
Presenting this year’s Mid-Year Budget Review in Parliament, he said in 2017, the Government reduced the tax burden by more than GH¢1billion through the abolishing of some taxes and the restructuring of others.
“Taxes abolished included the 17.5 percent VAT/NHIL on Financial Services and the one percent Import Duty on Spare Parts. Also removed was the VAT on Real Estates, domestic airlines and some imported pharmaceutical products to ease the burden on the National Health Insurance Scheme,” he added.
He said in February 2018, government further reduced the Special Petroleum Tax for consumers at a time of rising oil prices on the international market.
The Finance Minister said the government’s strategy on revenue mobilisation was to enhance performance by automation of systems, plugging of leakages, improving tax compliance and administration, review of taxes, and change in culture.
Mr Ofori-Atta said government was determined to widen the tax net and to make it fairer, simpler and convenient for citizens to meet the obligation of contributing towards national development.
“To ensure that government achieves the 2018 revenue targets, we have brought a number of reforms and measures into the tax regime. These initiatives will improve the efficiency of our tax administration, reduce costs and enhance taxpayer services,” he stated.
On tax compliance, the Finance Minister said, as part of efforts to improve revenue performance, they would intensify tax compliance and plug existing revenue leakages.
“Investigations we have undertaken show inbound leakages on goods arriving in the country, significant outstanding tax debts, suspense regimes in the area of warehousing, transit trade, and free zones, and tax audit issues such as limited coverage, low auditor productivity, and low audit yields.
“We are rolling out major initiatives to address these tax compliance issues. These initiatives will include prosecutions of tax evaders and corrupt tax officials, a special VAT Attack force to ensure enforcement and deepen VAT penetration from the current low levels of 11 percent, and institutional reforms at GRA,” he added.
He said tax compliance would also be boosted by the implementation of the Common Platform for Communications Traffic Monitoring, revenue assurance, mobile money monitoring, and fraud management.
Mr Ofori-Atta said the Common Platform would provide government with an accurate and comprehensive view of telecom revenues in order to verify tax compliance and to ensure the comprehensive billing and collection of all telecom-related taxes, levies, and regulatory fees.
He noted that several billions of cedis were lost every year due to transfer-mispricing and tax evasion, which led to a lower than expected Tax-to-GDP ratio.
The government, he said, will commission audits of local and multinational enterprises in Mining, Oil and Gas, Telecommunications Services, Transfer Pricing and High Net Worth Individuals to address transfer mispricing and other forms of tax evasion.