The Tax Justice Coalition-Ghana (TJC), a civil society organisation, has urged government to return the corporate tax rate to 35% as was the case in the 1990s.
Addressing the media last Friday to present an analysis of the tax policy initiatives and measures announced in the 2019 budget, the chairman of TJC-Ghana, Vitus A. Azeem said: “The TJC-Ghana believes that apart from the loss in revenues from a lower corporate tax rate, it is not fair to tax individuals at 30% or 35% while taxing companies which earn huge profits at a lower rate”.
Government introduced the new income tax band at a final rate of 30% for incomes above GH₵20,000 per month.
The TJC-GH believes that there is still need for a review of income tax rates and to flatten and expand the income brackets to include more income tax rates such as 15%, 20% and 35%; and make the income tax system more progressive to reduce the already-widening inequality in the country.
On the conversion of VAT to straight levies, he maintained that it increases the overall VAT burden on the taxpayer and businesses, and also defeats the VAT Flat Rate System (VFRS) policy which reduced VAT to 3% for several VAT-qualified persons.
The conversion also deprives businesses of the recovery of input VAT, which he explains affects the ordinary person because consumer-based taxes are regressive in nature and often lead to price-hikes – and may tend to reverse the recent achievements in inflationary trends.
The group as a result is calling on government to revert to the previous VAT regime of 17.5% standard VAT rate and the VFRS of 3%.
They also called for an amendment to the law [luxury vehicle tax] to take immediate effect, and not to have retrospective effect on people who purchased and registered their luxury vehicles several years ago when the tax was not in existence.
Furthermore, the group also appealed for government to pursue its decision to review current tax exemptions and monitor seriously implementation of the existing exemptions and other tax concessions.
Government has granted new tax exemptions such as tax breaks to private universities, abolishing the 7.5% income tax on the commission of lotto agents and removing VAT on lotto stakes to discourage people from engaging in illegal lottery and others. These concessions, according to the group, will reduce government’s revenue potential.
Using temporary Nations Builders Corps (NABCO) officers who have no security of tenure and motivation to offer quality and dedicated services will be a disaster and undermine the objective of effective revenue mobilisation, the group noted.
Additionally, the decision to link the taxpayer Identification number (tin) to social interventions needs to be looked at again, as it will impose “undue burden” on the illiterate and rural poor population, Mr. Azeem pointed out.