By Frederick ASIAMAH
Very soon Ghanaians without a tax identification number will find it difficult securing drivers’ licence, travelling passport, opening bank accounts and purchasing insurance policy.
This is because the Ghana Revenue Authority (GRA) is almost set to fully implement the Revenue Administration Act 2016, (Act 915). Through the law, the GRA makes the use of a taxpayer identification number (TIN) pivotal, such that its absence or lack thereof makes it almost impossible for a prospective client to do business.
Mr Emmanuel Kofi Nti, Commissioner-General of the GRA, who presides over an institution that is mandated with implementing Act 915, told journalists recently that a time will come when it will be difficult for Ghanaians to transact business at the Passport Office, Driver and Vehicle Licensing Authority (DVLA) and so on without a TIN.
That time seems to be upon Ghanaians following recent digitisation interventions by government; pivotal among them being the launch of the digital addressing system, the national identification system and the paperless port clearance system.
The Finance Minister, Ken Ofori-Atta who will soon appear before Parliament to outline government’s fiscal policy and budget statement for the year 2018, has often emphasised the digitisation process as government’s strategy for raising revenue.
Mr. Kofi Nti presented a precursor to this year’s budget presentation when he lamented last week that only a small proportion of Ghanaian workers pay tax – about 200,000.
Per the requirements of the law, every employee ought to have a TIN, which will also entitle them to transacting business with or receiving service from the following state institutions: the GRA; the Controller and Accountant General’s Department; the Registrar General’s Department; the Registrar of Co-operatives; the Land Title Registry; the Immigration Service; the Passport Office; and the Driver and Vehicle Licensing Authority.
As well, when the law is fully implemented, TIN numbers would be required for transactions with the Courts; Ministries, Departments and Agencies; Metropolitan, Municipal and District Assemblies; Unit committees; and Banks, Insurance Companies and other Financial Institutions.
Impact on revenue
It is suggested that tax administration in Ghana, like in any other jurisdictions faces peculiar problems: of getting taxpayers to voluntarily fulfil their tax obligations to state; an increasingly informalised economy; and no broad tax education or knowledge hamper the ideal.
“A Ghana Statistical Service (GSS) report on the mean annual expenditure by Ghanaian households for various purposes, puts tax (including other national levies) as amongst the least ranking with 7.7% compared even to gifts and presents (excluding remittances) at 21.7%…” according to the Integrated Social Development Centre (ISODEC), which is putting together a report of its study into the implementation of the TIN by GRA.
It observes that this is “An indication of a generally low tax per capita expenditure of the average Ghanaian citizen.
“The TIN, if effectively implemented, not only will it lead to proper tax revenue forecasting and mobilisation but also a far-reaching impact on Ghana’s financial inclusion drive. This can help to track incomes and impose a presumptive tax where applicable, based on such projected incomes, as well as stem illicit activities.”
For emphasis, the memoranda to Act 915 states that “The Bill will ensure increased efficiency in the collection of tax, improve tax administration and reduce the obstacles to compliance. This will invariably facilitate the implementation and optimization of revenue collection.”
Statistics on the 2016 fiscal budget show that total tax revenue for the period amounted to GH¢25,728.7 million, equivalent to 15.2 per cent of GDP. The outturn was 11.7 per cent lower than the target.
“The reason attributed to this low tax revenue performance was the slowdown in economic activity for the period,” ISODEC writes in a draft report on its study which will be put before stakeholders this week for validation.
Nonetheless, on a year-on-year basis, the nominal outturn in 2016 was 16.5% higher than the outturn for the same period in 2015. While the nominal growth of 25.5% between 2014 and 2015 indicates better performance year-on-year, total tax revenue outturns, still lags international standards of about 20% tax-GDP-ratio for a lower middle-income country such as Ghana.
Further, the International Growth Centre (IGC) estimates that the country’s informal sector has the potential to pay about GHC227.8m more as taxes than currently done.
“The IGC estimates that with actual tax payments amounting to about a GHC100.0million, in the informal sector, estimated national tax losses amount to about GHC227.8 million. This study on the informal sector (non-farm enterprises) gives an indication of potential losses only in one area. Hence, the idea of a potentially huge tax gap presents an avenue or a potential for raising additional taxes for development,” ISODEC indicates.