Expert calls for Reforms in Ghana’s Tax Payment Structure 

There is a need to re-examine the current structure of Ghana Revenue Authority (GRA) to identify weaknesses with the organogram and formulate rules to improve its efficiency and effectiveness, Mr.  Abdallah Ali Nakyea, Managing Partner of Ali-Nakyea and Associates has said.

The government, according to him, must take a second look at the current structure where taxpayers are classified into large taxpayers, medium taxpayers and small taxpayers with each class handled by a distinct tax office.

The institutional reform agenda, he stated, could take the form of dividing the country into zones and re-introducing the regional office concept and structure.

Speaking on the topic:  “Tax Implications of Government’s Fiscal Policies for Businesses in the 2020 Budget Statement” at a Multi-Stakeholder Business Integrity Forum [MSBIF] organised by Ghana Integrity Initiative [GII], the local chapter of Transparency International in Accra, he said, it was imperative that the government undertake the necessary stakeholder engagement and scientific revenue projections to ensure that Government derive the needed revenue.

On the review of major revenue legislations to remove conflicts and fill in gaps and the relevant amendments submitted to Parliament for passage as captured in 2020 budget statement, the           Managing Partner of Ali-Nakyea and Associates said reviewing tax legislation was one of the critical steps in any tax system reform agenda.

Government, he opined, must carry out broad based consultations with relevant stakeholders to identify the problems with the current tax laws and introduce amendments to ensure that these problems are addressed.

On the passage of the revenue administration regulations and the new transfer pricing regulations, Mr.  Abdallah Ali Nakyea stated that, these regulations are critical for the effective administration of taxes as well stemming the tide of transfer pricing fraud.

Given the fact that new transfer pricing regulations might introduce new compliance rules for taxpayers, he said,  there was the need to provide ample time between the date of passage and the commencement date of the regulations to enable taxpayers take the step necessary  to comply.

With regards to developing abridged versions of the major revenue, he noted that, this measure was laudable as it seeks to fulfill simplicity system. Simplicity, he adds, is one of the canons of a good tax system.

Simplification of tax laws, according to Mr.  Abdallah Ali Nakyea, would enable taxpayers understand their tax obligations and voluntarily comply with the provisions of the law.

Professor Godfred A. Bokpin of University of Ghana Business School in his delivery on the topic: “Government’s Fiscal Policy and Private Sector Business In 2020” said fiscal policy has not guaranteed private sector leadership under the 4th Republic.

Dwarfed revenue envelope in the face of rising expenditures, according to him, is a constrained to private sector leadership and would undermine Ghana’s ability to profit optimally from the African Continental Free Trade Area [AfCFTA] notwithstanding the fact that Ghana is hosting the secretariat.

Monetary policy effectiveness in reducing inflation and engineering growth, he said, was seriously constrained even under inflation targeting.

Fiscal and monetary policy, Professor Bokpin explained, must complement each other in supporting private sector now seen as engine of growth and employment generation noting that firm level governance, business strategies to advantage of AfCFTA are also fundamental.

The private sector, he said, remains relatively small and faces numerous impediments such as high and multiple taxes, unaffordable credit, high cost of public services, infrastructure bottlenecks, undue international competition and effects of macroeconomic instability.

As a result, he stressed, the sector has not been able to contribute its potential to growth. He advocated strongly for a deliberate and active policy interventions to address the impediments inhibiting the private sector and creating the necessary enabling environment for the sector’s potential to be unleashed.

Debt servicing according to Professor Bokpin was crowding out priority spending in easing the restrictions of the growth drivers of the private sector. This, he explained, adds to the high productive cost base of doing business in Ghana and creating inhibitions on private sector competitiveness.

High public debt, he noted, was crowding out private debt, resulting in shallow credit markets and fiscally-induced pressures on interest rates. This, he adds, would affect the Ghanaian private sector taking advantage of African Continental Free Trade Area though not peculiar to Ghana alone.

High public debt in Ghana according to the university professor was creating financial stability risks seen in government’s arrears to suppliers noting that a certain state sponsored non-performing loans is present in Ghana’s financial market.

Fiscal risk from the energy sector, Professor Bokpin stated, should be managed to avoid a crisis that erode the balance sheet of the private sector during the 2012-2015 crisis. Financial sector clean up, he said, should be thorough, transparent and sustained by effective regulation and supervision.

On fiscal and monetary policy reforms, he said, developing sustained sound macroeconomic framework underpinned by prudent debt, monetary and fiscal policy was imperative to guarantee private sector leadership.

This, he said, should be supported by necessary productivity enhancing reforms. These reforms, according to him should be bundled together for greater effectiveness.

Commenting on monetary policy, Professor Bokpin said, the Central Bank should communicate and assert its operational independence in addition to theoretical independence guaranteed in the law. The Central Bank, he added, should be watchful of ‘Soft’ fiscal dominance of monetary policy manifesting through pressure to contain domestic borrowing costs, fear of floating dues to foreign currency exposure, quasi-fiscal operations and monetary policy should complement and support private sector leadership.

With regards to fiscal reforms, he stated that, consistent with Ghana Beyond Aid, efficient and effective mobilisation and use of domestic revenue is fundamental

He said the country should use 2020 election to demonstrate love to the private sector by maintaining fiscal discipline (drop the usual Political Business Cycle/election year profligacy).

The MSBIF was themed:  “Implications of Government Fiscal Policies for Businesses in 2020 Year of Assessment.”

Source: Adovor Nutifafa ||





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