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Business News of Wednesday, 2 October 2019

Source: www.ghanaweb.com

Politics has played with Ghana’s tax system - IFS

Executive Director of the Institute for Fiscal Studies, Prof. Newman Kwadwo Kusi has blamed the country’s shortfall in revenue mobilisation on politicians.

According to him, government upon government instead of finding lasting solutions to address the challenges faced with the revenue mobilisation, rather enjoy playing politics with it, thereby affecting the tax system.

He maintained that although Ghana’s GDP projects positively, only a few percent of revenue is generated, which is not a good indicator for the growth of the economy.

“When you come to the tax system, we have a problem with the tax itself. For years governments have played politics with the tax system. That is why even though we have GDP of over 300 billion and only 12.6 percent of that is collected as tax”, he asserted.

The country over the years experienced some challenges with revenue mobilization in terms of raising the required taxes to match the level of economic activities.

The Ghana Revenue Authority missed its revenue target for the first eight months of the year, causing the authority to fall short of its target by 1.8 billion Ghana Cedis.

As a result, it has engaged the services of consultancy firm, McKinsey, to help it block revenue leakages that persist in its revenue collection which Prof. Kusi admitted it will help improve the tax administration.

Blaming the shortfalls on campaign promises, Prof. Kusi explained saying “this particular government came and decided that they’re shifting interest from taxation to production. What type of economics is that? Because the production is the tax space and the relationship between your tax revenue and the production is what we call tax buoyancy. So when your production goes up, if the tax administration is working, if the tax system is working, automatically your tax revenue will go up. But remember it’s the administration and the system. So your GDP can go up if the tax system is weak.”

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