By Stephen Odoi-Larbi
Since the introduction of additional taxes on goods and services in the Financial Policy statement of the Government of Ghana for the year ending December 31, 2011, which was presented to Parliament recently, a cross section of Ghanaians have expressed mixed feelings about the intent of Government.
Whilst some have argued that the introduction of additional taxes would worsen the plight of the masses, and that it would have been better to broaden the tax net, others too share the belief that the intervention was a step in the right direction, since it would help government to embark on various developmental projects.
However, the National Democratic Congress (NDC) Member of Parliament (MP) for Shama, Gabriel Kodwo Essilfie, has prescribed to Government to introduce more taxes on goods and services, since the tax regime of the country is too lenient.
“Mr. Speaker, as somebody who has practised financial management and tax administration in the United States Internal Revenue Service for thirty-five years, I will say that the tax regime for this country is too lenient, and if I were in the shoes of government, I would advocate for more taxes”.
Mr. Essilfie was contributing to the debate for the motion on the 2011 budget statement of the Government of Ghana, which was presented in Parliament on November 18, 2010.
The Minister for Finance and Economic Planning, Dr. Kwabena Duffuor, who presented the budget statement on behalf of President John Evans Atta Mills, proposed Communication Service Tax to all companies and persons across the country to ensure fairness in the telecommunication industry.
Quarterly payment of royalties by the mining companies has also been stopped with government demanding monthly payments. The practice of allowing importers of finished products to warehouse their products for up to two years before payment of assessed taxes, according to Dr. Duffuor, was over, since the practice was not consistent with bonded warehousing regime.
The threshold of the five per cent withholding tax was also increased from fifty currency points (GH¢50) to five hundred currency points (GH¢500).
Gift Tax was also increased from fifteen per cent, to be in tandem with general income tax.
Furthermore, the Government of Ghana proposed to increase airport tax from US$75 to US$100, US$150 and US$200 for economy, business and first class passengers, respectively for international travel, US$50 to US$60 for regional travel, and GH¢1 to GH¢5 for domestic travel.
In addition to this, the government also proposed an upward adjustment of the current Debt Recovery Levy, to retire the Tema Oil Refinery debt, and reduce its negative effect on the banking system.
In-spite of all the increases, Mr. Essilfie said “I don’t see anywhere where the tax that is being proposed is going to hurt both the poor and the needy. Nobody can tell me that if he has money, to board a plane, and the government is asking that you pay a little more on airport tax, it means the government is insensitive”, he noted, adding “If you are a mining company and the government is asking that instead of paying your mining royalties quarterly, you should pay monthly, that doesn’t mean that the government is insensitive”.
According to him, the tax increment would neither put pressure nor pain on the poor and needy since it seeks to target those making lots of money. “Mr. Speaker, when you go to all the tax initiatives here, there is nothing in there that really puts pressure or pain on the poor and the needy. It’s all about the people who are making more; middle income, lower-upper class and upper class”.
On the issue of taxation for exempt organization, Mr. Essilfie said the introduction was only targeted at non-profit organizations that do not venture into commercial activity. He further proposed to Government to set up a special department to regulate and monitor non-profit organizations, including churches in this country, so that the government can collect the necessary taxes to propel the acceleration of the economy.