The Chartered Institute of Taxation Ghana (CITG) has called on the Ghana Revenue Authority (GRA) to reconsider its stance on tax holidays since no advanced country in the world has ever asked its investors who were enjoying holidays to pay tax.
Speaking at a public forum organised by the GRA on Friday in Accra, Mike K. Afflu, president of CITG, said: “I am yet to hear of one. Tax holidays mean tax holidays. And now we are now saying, when you make profit during the tax holiday, you would pay 1 percent. If GRA wants to mobilize revenue, it should not make mockery of our task laws.”
“We are professionals and so we look at world standards. Now, we are going global so we must make sure we also adopt international standards. It is our view that all the 1 percent taxes should be withdrawn.”
Mr Afflu also called for the gift tax to be abolished considering the effect it will have on the economy.
Capital allowances
According to him, there were serious limitations on this which would not favour investment and therefore suggested that the existing law should be maintained so that unutilized capital allowance could be carried forward at the discretion of the taxpayer.
“The capital allowance is for the taxpayer so it is the taxpayer who decides what to do with his capital allowance and not the administrator. So that limitation clause here is not best for the investor.”
Withholding taxes
He also touched on tax on services, which has been increased from 5 percent to 15 percent, noting that that was on the high side.
“In fact, we will recommend that the 5 percent is maintained. Because, even if it is brought down to 7 and half percent, it will still work out to 30 percent in real terms.…Why don’t we identify the recalcitrant taxpayers and then make them comply? If we want to widen tax base, then emphasis should be on compliance.”
Agriculture
. Mr Afflu also asked government to give serious consideration to agriculture.
“We have the capacity to produce. Why don’t we give more of our tax incentives to agriculture to encourage more people to go into agriculture and produce more food for export in exchange for technology which we need in this country? These are some of the incentives that would encourage our young men to go into farming.”
Lagos State example
He asked the GRA to adopt a strategy by the Lagos State in Nigeria which involved traditional rulers in its tax education drive.
“In this country, we have never involved out traditional rulers in our tax education drive. They are the custodians of the people. It is time now for us to introduce our traditional rulers and religious leaders into taxation.”
Government engagement in business
He advised government to pull out of business on grounds that worldwide experience has shown that governments cannot sustain businesses which they engage in.
“We therefore think that government should leave business to business people. If we look at Hong Kong, instead of the government saying that it is going to build affordable houses, what it has done is that it has waived interest on rent so that there is no rent tax. So probably developers have been made to put up houses for people to rent. So that whatever money government has can be channeled to other areas for development.”
Final advice
In order to improve the tax system, he called on government to defer the more challenging aspects until positive results were recorded.
“Put in place a system of monitoring. Pluck leakages due to corruption in the economy,” he said.
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