Security Warehouse

Business News of Monday, 19 June 2017

Source: Graphic.com.gh

Tax cut in spare parts should translate into price reduction – Ali Nakyea

A tax expert, Mr Abdallah Ali-Nakyea, has stated that following tax cut on the importation of spare parts, efficient mechanisms should be put in place by the government to ensure that the intervention translates into price reductions in the market.

"The removal of some of these taxes can encourage smuggling and dumping of goods if care is not taken, so we need to have an efficient tax clearance regime and proper auditing in that sector," he said.

On a vehicle towing levy that is scheduled to kick-start on July 1, this year, he called for the withdrawal of such initiative.

"The point is that, if your car breaks down, you have to pay for it to be towed, but the kind of system that is being brought is more of an insurance policy, and that will not be an efficient way of managing the system," Mr Ali-Nakyea averred.

Lecture

The managing partner of Tax Attorney, Solicitors and Consultants, was speaking at a public lecture organised by the Institute of Chartered Accountants, Ghana (ICAG) in Accra last Friday.

It was held on the theme, "the 2017 budget and tax revenues: can the government meet its revenue targets."

The lecture brought together key stakeholders, including members of ICAG, the Ghana Revenue Authority (GRA), Ministry of Finance (MoF) and a section of the public.

Revenue

On revenue generation, the expert urged the government to implement immediate and strategic mechanisms to meet its revenue target or risk missing out on its projection.

"If you look at the budget, some measures have been put in place that should make it possible to achieve the target, but what we should be looking at, are other measures that can be adopted to achieve the target earlier or even exceed it.

"We always talk about improving tax administration without really taking bold steps to doing so," he stated.

Measures

Mr Ali-Nakyea said even though some initiatives by revenue mobilisation institutions such as tax stamp and piloting of self-assessment test initiatives were prudent measures that could bring about efficiency in revenue generation, the delays in rolling out those measures could affect the achievement of the revenue target.

"We were made to know that latest by the third quarter of this year, they will start implementing these initiatives, but the second quarter is almost ending and we are not seeing any readiness in that direction.

"We don't want withdrawals or any situation of back and forth in implementing the initiatives, else the target may not be met," he said.

He further advised the government to seal all loopholes and also ensure that there was no tax evasion in order to generate more tax revenue.

Tax stamps

For his part, a Revenue Policy Analysts at the Finance Ministry, Mr Anthony Dzadzrah, said plans were advanced to introduce tax stamps by the end of the third quarter of this year.

"The law on tax stamp was passed in 2014 mandating that stamps should be put on some items such as water, tobacco, beers and liquors.

"We will put stamps on the products to show that the right taxes are paid to check tax evasion and smuggling of the goods," he said.

Mr Dzadzrah also allayed fears that the government might miss out on its revenue target, stressing that “barring any major economic challenge or power crisis, the target will be achieved."

Challenges

The Head of Audit at the Domestic Tax Revenue Division of GRA, Mr Martin Kolbil Yamborigya, said the lack of proper national identification system was a major setback to revenue mobilisation.

He, however, said the GRA was poised to deploy robust mechanisms to clampdown on undervaluing of goods and evasion of tax.

"GRA is aware of the temptation by some tax officers to engage in acts of corruption. Some of them have been interdicted and the law will apply to them appropriately," Mr Dzadzrah added.

According to him, a tax identification number as a mandatory requirement to transact business as well as the use of a geographical information system will help to rope in more people into the tax net.