Policymakers urged to take bold decisions

Mr. Alhassan Andani, Managing Director, Stanbic Bank Ghana, has called on policymakers to take the bold decision to collect substantial tax revenues from the informal sector.

He said this will help government to acquire more funds to embark on developmental projects for the country to reduce the unemployment rate that has become difficult to address.

He said although it is more difficult to tax that sector, it is growing very rapidly and the only way to spread the tax net is to extend it to the sector, else the obligation of paying tax would always remain the responsibility of those in the formal sector who already honour their tax obligations.

“Already, prices of a lot of items have been increased, which is affecting the standard of living. So many people in the informal sector make a lot of money, albeit in bits, but pay no taxes. If we do not begin to collect from them, the tax burden will always remain on those who already pay taxes.”

Mr. Andani said this at the launch of community radio station ZAA Radio’s “Entrepreneur and Investment Month” programme in Tamale.

It aimed at promoting northern Ghana as an investment destination in the country, attract more investors to establish businesses to create more jobs for the youths and prevent them from migrating to the cities to search of non-existing jobs.

He noted that taxing the informal sector is not particularly new, but governments have shied away from it for a number of reasons, including political expediency and difficulty in taxing the sector.

He said the government must pursue responsible fiscal spending targetted at development of infrastructure such as roads, railways and gas, adding that these would have knock-on effects on the other sectors.

He commended the organisers of the programme for such an initiative and reiterated that when the investors extend their businesses to the north, it will help the indigenous to have a fair share of the national cake as well as reduce the decongestion in the national capital.

The Northern Regional Communications and Public Affairs Officer (PRO) of the GRA, Abugri Afuugu, noted that 70 percent of business entities operating in the informal sector in the Northern Region do not honour their tax obligations.

These entities, mostly sole proprietorships, include retail outlets, petty traders, artisans, food vendors, hairdressing salons and drinking bars, he added. Mr. Afuugu explained that many informal sector business operators in the region were evading their tax obligations because they had failed to register their businesses with the tax office.

“Persons who want to start a business must first of all contact the tax office for advice and help relating to their tax affairs and desist from jumping into business without completing the registration process,” he noted.

Mr. Afuugu said the registration of a business is now a one-off transaction in the life of a business upon payment of an appropriate fee that is not subject to annual renewal.

“When you register with us, we give you an identification number and a tax certificate, which must be displayed boldly at your workplace,” he said.

He noted that although there are sanctions for operators who fail to honour their taxes, the GRA often wants to avoid instituting these sanctions.

“Instead, we want business operators to approach us and negotiate the terms of payment of their taxes to make it more favourable,” he said, adding that resorting to court is not always a good option since it could cripple many businesses.

Mr. Afuugu therefore urged all taxpayers, including withholding agents, not to shirk their responsibilities in meeting deadlines for settlement of taxes that are due.

Mr. Alhaji Mohammed Umar, Chief Executive Officer, ZAA Radio, appealed to government to give tax holidays to investors in the Northern Region.

This, he said, will attract more investors to the north to create job opportunities for the youth.