By: Bishop Nathaniel Rudolph
Taxation is said to be the lifeblood of domestic resource mobilization. It is the single most important source of generating government revenue. The provision of good amenities including quality health care, education, commerce etc. is premised on the collection and proper application of taxes. Hence, the better condition citizens enjoy in a nation is proportionately hinged on the volume of taxes collected to provide those amenities. In converse, the lower the revenue mobilized by way of taxes, the little the amenities provided.
The Ghana case is very disheartening because, out of the estimated 6 million people expected to pay tax, only 1.5 million people (25%) are paying, leaving out a whopping 4.5 million people (75%) who don’t pay tax. This has been the narrative and the debacle of the then Internal Revenue Service (IRS) and now the Ghana Revenue Authority (GRA) for many decades now.
For many decades I have been hearing “broadening the tax net” and yet this “net” has refused to broaden or we intentionally refuse to broaden this “net”. Broadening the tax net, simply means that, the estimated 4.5 million+ people who work without paying tax should start paying their taxes ‘simplicita’.
It must be forcefully stated that the inequality created between the formal and informal sector by way of taxes is unacceptable. People within the formal sector pay their taxes religiously because they have no option anyway. Meanwhile, the majority of the people operating within the informal sector comparatively, make more money monthly than those in the formal sector and yet they don’t pay tax.
In a study conducted by SEND Ghana under the project themed “Promoting Progressive Tax for Inclusive Development” (PPTID), it was revealed and I quote “Though the study documents high level of financial dissatisfaction among majority of respondents who are low-income earners, they recognize the need for every citizen regardless of their economic status to contribute to the developmental agenda of the country through the payment of taxes”.
The above revelation indicates that, given the opportunity, citizens operating within the informal sector will honour their tax obligation to the state. When the majority of Ghanaians are on the tax roll, and the government is receiving the taxes, there will be no need to introduce new taxes. Moreover, unnecessary taxes slapped on petroleum products, for example, can be removed to cushion the burden on the poor.
However, the GRA, in my opinion, has compounded the problem by the “inadequate staff” syndrome, and let me state here that NABCO is not the solution.
There is nothing new under the sun. in biblical history, which can be fairly contextualized in this matter, God proffered a solution when confronted with a similar challenge in Luke chapter 10 verse 2 quote “Therefore said he unto them, the harvest truly is great, but the labourers are few: pray ye therefore the Lord of the harvest, that he would send forth labourers into his harvest.
The solution to turn the tide of low revenue mobilization through taxes is to send more labourers by way of recruiting highly motivated individuals and institutions with assigned jurisdiction of operation. These Tax Mobilizers should be trained and licensed (clothed with authority) to glean the informal sector (field). Of course, they should be incentivized by the retention of 5% of tax receipts through their efforts.
These Tax Mobilizers among others will through advocacy, sensitize and educate the client, organize their book-keeping culture etc. This is the surest way to mobilize more taxes for improved national development because the ordinary Ghanaian will not voluntarily pay tax, tax must be extracted from the Ghanaian.