The Tax Justice Coalition is suggesting the state be flexible in its efforts to tax the informal sector of the economy.
Despite the large size of the informal sector, in terms of operators of the economy, constituting about 70 percent, its contribution to tax revenue stands at about two percent, according to the Ghana Revenue Authority.
On the Citi Breakfast Show as part of the Oxfam Tax Dialogue, the Coalition’s coordinator, Leonard Shang-Quartey, said a tiered system of formalisation would be more prudent.
“We need to have different layers of regulation. We can formalise the informal sector but the formalisation shouldn’t bring them into the fold of the mainstream approach.”
He noted that the complexities of the informal sector required more innovation and flexibility.
“For example, the people operating in the Makola market, you want all of them to start filing accounts. That is not going to be realistic.”
Without some flexibility, Mr. Shang-Quartey cautioned that there may be some more push back.
“The informal sector will always be the informal sector. If you try to apply stringent measures then you end up creating another informal sector.”
The Ghana Revenue Authority has noted that there should six million people who are supposed to be on the tax net.
But the GRA records only just 1.5 million people paying taxes regularly.