Widening the Tax Net: …artisans in focus

The government of Ghana has since independence depended on the donor community to fund between 30-40% of its budget over the years. Various efforts have been made by previous governments to reverse the trend. The current government led by Nana Addo Dankwah  Akuffo-Addo has announced its intention to wean itself from donor support with the ‘Ghana Beyond Aid’ idea. Some of the support has come with unfavourable conditionalities that some Ghanaians did not like, but others saw them as necessary for us to use the funds for their intended purposes.

When President Nana Addo Dankwa Akufo-Addo hosted the President of France, also when the Minister for Finance gave a lecture at the Fifth Anniversary of the death of late Vice President Alhaji Aliu Mahama, and on a number of occasions the current Vice President Dr. Mahamudu Bawumia have all spoken about the Ghana Beyond Aid – more recently when he met the regional ministers in Kumasi. Achieving this depends on all of us as citizens raising more internal revenue through taxes.

At the same time, very ambitious social intention programmes have been rolled out or are being revamped to make them sustainable; such as Free SHS, NHIS, School Feeding programme, restoration of teachers and nurses allowance etc. Government needs to mobilise internal resources mainly through taxation to finance all these programmes.

It is in view of the above need for revenue that the Ghana Revenue Authority (GRA) has intensified its efforts at collecting taxes owed by persons – individuals and corporate institutions. This is a good thing in our efforts at securing financial independence.

The crux of the matter for succeeding in weaning ourselves from donors is through formalisation of the Ghanaian economy to rope-in all persons who earn income and are eligible to pay taxes. Indeed, many people clamour for more social intervention programmes and social infrastructure from government, yet they don’t contribute any of their income from either employment, business or investments.

Again, that group of people has a higher propensity to give birth to many children so that government must invest in social amenities to meet their needs. Statistics available indicate that only 1.2million Ghanaians pay taxes out of an eligible four million people. Indeed, this is likely to be an underestimation.

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This article focuses on a segment of people, the artisans, who are out of the income tax net yet earn a lot of income – sometimes more than those in formal sector employment. These include masons, plumbers, carpenters, electricians, tilers, POP installers etc. A carpenter can roof a three-bedroom house and charge GH¢5,000 and complete in two weeks, collect his money and pay no taxes to the state. A similar carpenter in the ministries will earn GH¢800 per month and suffer PAYE income tax to be used on building schools that both carpenters’ children will attend. Certainly, this is not fair.

There is an example of formalisation initiated by the Energy Commission of Ghana that is worth copying and improving on. Under that policy, any electrician who has not been certified by the Commission cannot wire a house (and to some extent cannot undertake electrical repair works), or else the ECG will not connect power to that house.

The Energy Commission took the people through training and certification, and therefore has their database: and I believe that in applying to ECG for power connection, it will refer to that database to be sure the electrician is qualified to wire the house before connection will be made after it makes other routine checks. This was done for a different purpose from tax, but I believe it is an initiative that could be extended to tax collection.

Firstly, that database could be linked to the National Identification system and the people given Tax Identification Numbers (TIN).

Secondly, at the point of registering for their Ghana card by stating their profession, the number should be added to their database in the National Identification System.

The others in plumbing, masonry, carpeting etc. should be trained and certified by the Ministry of Works and Housing or Labour Commission for similar purposes. If you are not certified, you cannot offer such services to the public for income.

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The next issue is registering all landlords (completed and uncompleted buildings, using the Ghana Post-GPS property addressing system and making them withholding tax agents (with extra punitive sanctions for failing to account and pay taxes so withheld to the GRA). We should know that in paying artisans the GPS address of the house will be quoted for easy tracking, and receipts given to the artisan who can report to GRA to check if the landlord who deducted the amount has remitted such to the GRA within the same week –  not 15th of the following month as with the corporate institutions.

The challenges associated with the above include monitoring by the GRA staff, collusion between the landlords and artisans, landlords’ failure to deduct and remit to GRA; and above all, the political will to implement it. Public education to let the artisans appreciate that is in their own interest; pre-emptive initiatives to scatter the ‘poison from the opposition’ is also very critical.  The NCCE could assist in this regard, as it has started with the GRA on tax education.

As citizens of Ghana in the middle-income bracket, we must work at self-economic independence by contributing to the national coffers through our income taxes – for little drops of water, they say, make a mighty ocean. The other issue is fighting against the corruption that quenches citizens’ interest and desire to voluntarily pay their taxes.

With tax compliance and a sustained fight against corruption in public procurement and administration, we can be self-sufficient and gradually the donor-dependent syndrome will go away so our national pride can be restored and boosted. Let us all – as Ghanaians, no matter your profession – contribute to national development by paying our fair share of taxes and be justified in asking for our fair share of national development.

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