Deloitte Ghana, a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax, and related services, believes the need for enhanced revenue mobilization efforts by the government and control of expenditure cannot be overemphasized.
“However, in raising the much-needed revenue, it is imperative that the actions taken by the government do not worsen the woes of the general population,” it said in its analysis of the 2020 budget and economic policy of the government.
Deloitte Ghana is urging the government to come up with more innovative means of roping in the informal sector into the tax net other than resorting to the 1.75% Electronic Transaction Levy (E-Levy). In a 27-page document on the 2022 Budget and Economic Policy, Deloitte Ghana, among other things, zoomed in on some revenue mobilization measures proposed by the government.
It also suggested that government “explores other means of roping in the informal sector into the tax net, which targets actual income generated by the informal sector players.”
Below are some of Deloitte Ghana’s proposals for consideration by the government going into the 2022 financial year, as outlined below;
Tax policy proposals
1. Implementation of VAT on electronic services law
VAT on non-resident supplies of e-commerce and telecommunication services has been in our VAT law since 2014, but implementation is still pending. We understand the GRA is currently developing systems to aid the non-resident’s register and comply with their obligations in Ghana. We recommend that the Government sees to it that the process is fast-tracked, and the required implementation guidelines published to aid compliance and help raise more revenue for the country.
2. Implementation of the Fiscal Electronic Device (FED) system
This system has been approved since 2018 but remains unimplemented to date. The FED system is expected to be connected to VAT suppliers’ systems to provide the GRA with real-time assess to VAT transactions. The benefit of the FED system will be to provide enhanced revenue assurance via a digital means that is less intrusive and costly compared to regular audits, while plugging revenue leakage.
3. Automating WHTCC and TCC issuance
The GRA made significant progress in automating tax compliance with its launch of the taxpayers’ portal in 2021. With this portal launched, we recommend that the GRA continues to extend the various compliance tasks that can be handled on the portal to ease compliance costs for taxpayers.
Two of these tasks we recommend the GRA considers are the processing of Withholding Tax Credit Certificates (WHTCCs) and the issue of Tax Clearance Certificates (TCCs). Automating the WHTCC issuance process has the potential of reducing taxpayer compliance costs and enhancing business cash flow, as well as the cost of collection on the part of the GRA. An automated TCC issuance process is also likely to enhance the ease of doing business and encourage voluntary compliance with tax obligations.
Economic Policy Proposals
4. Economic growth and recovery
The government should aggressively pursue programmes aimed at increasing the production and export of commodities such as gold, crude, and cocoa as prices for these commodities are expected to increase due to the increased demand for these commodities in advanced economies.
Government should consider providing attractive incentives including tax rebates and easy access to financing to the mining sector as the sector has been a major driver of the economy in the past years. The proposed incentives will enable mining companies to start and increase production, which will ultimately boost activities and impact the growth of the sector.
5. Debt management
The government should endeavour to diversify its borrowing sources and limit its reliance on domestic borrowing, which could result in a ‘crowding out effect’ by limiting available credit to businesses and increasing the cost of borrowing in Ghana.
The government’s decision to diversify the debt portfolio and access syndicated loans from commercial banks is laudable, however, the Government should negotiate the competitive interest rates on these facilities in order to reduce the rising interest payment.
6. Revenue
In order to achieve a budget deficit of less than 5% in 2024 in line with the Fiscal Responsibility Act, Government must ensure it operates a controlled budget expenditure and work towards achieving planned revenue targets. In line with this, Government should ensure the implementation of the Unified Common Platform and other tax programmes and policies aimed at widening the tax net.
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