By: Masahudu Ankiilu Kunateh
Mr. George Blankson, Commissioner General, Ghana Revenue Authority
The Ghana Tax Justice Coalition, a group of civil society organisations and individuals advocating for a transparent and fair tax system in the country, has raised red flags over the government’s inability to implement a number of tax regulations.
According to Coalition, at the end of 2011, the Parliament of Ghana approved a Legislative Instrument, “Internal Revenue Act (Schedule) (Amendment) Regulations, 2011” (L.I. 1996).
The LI was approved on July 11, 2011, but its date of notification was July 22, the same month.
However, its date of entry into force was November 25, 2011.
The LI, among others, provides for new income tax rates applicable to resident individuals for the year 2011.
This was contained in a press release issued by the Executive Director of Ghana Integrity Initiative (GII), Vitus Azeem, in Accra today.
The coalition recalled that these new tax rates were contained in the proposed 2011 Annual Budget presented to Parliament, and approved in December, 2010, to take effect from January 2011. This was meant to alleviate the tax burden on the citizens.
Once the Annual Budget was approved by Parliament, the new tax rates should have been implemented with the other provisions of the Budget for 2011, the Mr. Azeem-led coalition stressed.
What was expected was for the Minister for Finance and Economic Planning (MOFEP), Dr Kwabena Duffuor, to lay the appropriate LI before Parliament for its approval, and after 21 days, the LI would have become law, unless Parliament had a problem with it.
Apparently, either the Honourable Minister failed to do this, or Parliament failed to act promptly on the proposed LI.
However, the Minister finally got the required approval July 22, 2011, and the tax rates should have become applicable immediately, if not with retroactive effect from January 1, 2011. This did not happen, the press release indicated.
Moreover, a close examination of both the old and the new tax rates show clearly that they do not favour the poor and low paid employees in the country. The lower bands are very insignificant, bringing virtually no benefit to those in the low income brackets.
This shows that the apparent progressivity of our income tax system is largely restricted. These bands need to be made wider, and come with the re-introduction of the three tax bands, that is, 15%, 30% and 35% bands, which were removed some time ago.
According to the Coalition, Parliament also failed the Ghanaian tax payers, particularly, the salaried workers whose taxes are deducted at source on a monthly basis.
They added: “The LI came into force on 25th November, 2011, when the year was just about to end, for reasons best known to the Honourable Members of Parliament (MPs) who are supposed to speak and act on behalf of their constituents.”
The Coalition was quick to say that Ghanaians lost the benefits of the new tax rates without any explanation from the two arms of government, who are elected by Ghanaians.
Additionally, the Tax Justice Coalition called on the Minister of Finance and Economic Planning to address this lapse in the budget implementation promptly.
“We further call on the Minister for Economic Planning and Parliament to offer a credible explanation on the following to tax-paying Ghanaians:
“The main reason for the delay in laying the LI before Parliament for its approval to take effect from January 1, 2011; What prevented Parliament from approving the LI to take retroactive effect from January 1, 2011? The main reason for the additional delay from July to November, 2011 for the LI to take effect, after its approval in July; and whether the Ministry and Parliament considered the negative effects of their inaction on the salaried tax payer, as compared to the self-employed who waits to file returns at the end of the year?”
While the Coalition awaits responses to these questions, it further called on both the Ministry of Finance and Economic Planning and Parliament to avoid doing the same thing with the new tax rates that are contained in the 2012 Annual Budget that has been approved by Parliament.
This time, the LI to operationalise the new tax rates should be laid before and approved by Parliament without any delays, to take retroactive effect from January 1, 2012.
The essence of the reviews of tax concessions, tax rates and personal tax reliefs is to cushion the tax payer from undue hardship, due to inflation and other economic difficulties. It is, therefore, imperative that when the government announces new tax policies, all the key players should act promptly to ensure that the taxpayer benefits from the policies.
It would be recalled that Third World Network (TWN) issued a statement on a similar inaction recently. It drew the attention of Ghanaians to the fact that Ghana’s 2012 “Annual Budget Statement and Economic Policy” proposed an increase in corporate tax for mining companies, from 25% to 35%.
However, this tax is yet to be implemented, although the Budget was passed into law in December 2011, deliberately depriving the country of the additional tax revenues that the country would have obtained.
The Tax Justice Coalition wishes to appeal to President Atta-Mills and his Finance Minister to demonstrate their “political will and commitment” to implement the proposals they bring to Parliament for approval.
