Accra, February 24, 2018//-This week I attended several conferences during a seminar of the United Kingdom Ghana Chamber of Commerce on Tax Amnesty and one of digitalization of our economy organized by IMANI Ghana.
Coming to Ghana since the early 1990s, living in Ghana, Holland and South Africa since 1998 and permanently living for the last 14 years and being one of the few involved ‘Obronis’ literally means (white people) in Ghana, I think I have a fair view how things are working in our country.
I am proud of Ghana, Ghanaians and genuinely appreciate living in Ghana, but I remain critical because I sincerely believe that not talking or covering up what is not correct in Ghana is not in the interest of Ghana. I knowingly take the risk that people tell me: If you don’t like it here, why don’t you leave or sometimes other rude remarks.
Now let’s start by mentioning some general observation I made whilst living here:
Ghanaians are not creative, Ghanaians are innovative.
All I state is IN GENERAL, meaning there will always be exceptions, to avoid discussions in the wrong direction on these subjects.
The discussion I am about to start is, like the title suggested, about Ghana Revenue Authority (GRA) and not about Ghanaians.
The reason I mention Ghanaians is that GRA civil servants are a good reflections of these general qualities (or actually lack of qualities) of Ghanaians in general in their job.
Ghana is missing out on so many ways to collect taxes, which they could simply have copied from many other countries, whilst they are offering and presenting tax amnesty as the greatest invention on earth.
The only creative thing I have ever seen from the GRA was the so called “talk tax” introduced by the Government of President Kufuor.
Free secondary education is in my opinion a great initiative, but it has one big problem, a lot of people who never paid taxes were paying school fees.
Now they don’t pay school fees are they going to pay taxes to our government to pay school fees ?
Several weeks ago there was a nationwide discussion on the reduction of tax on oil products by 2%. Main argument of the opposition was that the cost of petrol was already high for businesses in Ghana.
There is a simple solution to avoid that and many countries in the world use it.
Start to Tax on car ownership: commercial vehicles are excluded, small cars attract a low tax, big cars with large engines attract a higher tax, cars older than 15 years get a reduction and cars older than 25 years (old-timers) are tax exempted.
Today some owners of luxurious cars are not even registered tax payers and don’t have a Taxpayer Identification Numbering (TIN). My opinion: you want to be a “big man” with a big car, pay your tax on that car.
GRA can use so many “tools” to increase revenue concentrating on milking the existing registered tax payers instead of trying to close the tax net and catch everybody having an income.
GRA can start using the mobile money system of the telecoms to get information. If someone who is not a registered tax payer can transfer every week some money to mother, wife and other receivers, that person should be able to pay tax on that.
GRA should tax properties. A house and roof above your head is a first need in your existence, so small houses should not be taxed, but if you live in a 3-bedroom worth 50,000 Cedis you can pay 1% (for example) if you live in a house of 500,000 Cedis you pay 2% (after all you can afford such a house) if you live in a house worth 1,000,000 Cedis or more you can easily afford 3% I think.
If you have to pay tax on your house and claim not to have any income because you don’t work, than you must have plenty time to be engaged in community service (cleaning gutters, maintaining parks) at a rate of GHC30 about US$6 a day until your debt is paid and our streets will be clean.
Is the GRA serious in catching people to pay tax?
Several Ghanaian banks and financial institutions are openly advertising for Ghanaians to invest in tax heavens. I have been approached several times by them and they could guaranty me high yielding investments in the Channel Islands, Gibraltar and other possibilities, promising me payment abroad and income abroad.
I just listened to their stories and suck all information in and never invested. I made several politicians and officers of GRA aware of this and nothing happened so far, these companies and banks are still advertising their services.
GRA is asking, no actually ordering registered bonafide companies to withhold taxes from non registered companies, just like they do with VAT. If the registered company doesn’t comply they receive a penalty on top of the not withheld taxes.
Have you ever tried to withhold tax from a casual laborer or small company?
Either they will just put 15% on top of their invoice so you can withhold and they receive the amount you owe them, or they will simply not deliver the service or the goods, so the bonafide entrepreneur ends up paying somebody else’s withholding tax.
Why is GRA incapable of collecting taxes from people having roadside shops, delivering goods on which we need to withhold tax, if I can find them, they should also be able to do so?
The potential income for Ghana on income related taxes is many times larger than on company taxes, simply because there are so many more people than companies.
Everybody who buys or leases a land has to go through a valuation process and pay a tax based upon the value of that land, but are the chiefs, clans or families receiving payment of that ever taxed ?
The problem is not only companies but also simple staff: A few years ago my secretary was earning GHC1,200 for her official job, after taxes and SNITT the remaining net salary was about GHC850.
Around the same time there was an article in the Daily Graphic about boys selling yam on the Graphic Road making GHC70 daily. Just do the calculation 70 x 22 working days a month (although they are 6 days a week present) makes GHC1,540, tax and SNITT paid GHC0.00.
The biggest disappointment is that my secretary finished university and the boys selling yam, primary school only. Do you really think that motivates people to look for official jobs? Or should they rather look for an informal job keeping all your money in your own pocket?
Another missed opportunity are foreign companies abroad making money on services they deliver in Ghana. Services like Uber, hotel.com, booking.com are being paid based upon services they provide to Ghanaian companies.
I own and operate a small guesthouse and pay between US$300-1000 a month for the guests who are booking through the website of booking.com. If I try to withhold tax on their services my guesthouse will be removed from their pages about Ghana.
They have an office in Ghana and I went there several times explaining my obligation to withhold but couldn’t get an answer.
On top of that they are delivering services in our tourist industry and they don’t pay tourist levy, what are we doing ?
As I said a layman on taxes (me) who have seen and lived in the world outside Africa can see the opportunities why can’t GRA see them?
Ghana signed on to an Economic Partnership Agreement (EPA) with Europe. That agreement in itself is a great opportunity for Ghana to export duty and quota free to Europe.
However there is one “small” point which could turn the whole agreement in a disaster for Ghana.
In Europe, the majority of taxes are collected on companies, properties and private income.
In Ghana, the majority of taxes are collected at our borders, now when you tell your largest trade partner that in 15 – 20 years 75% of import duties from the EU will be scrapped, what do you think will happen to your tax income?
If Ghana doesn’t change its tax collecting system quickly to the European way of tax collecting, we are going to miss out on billions of dollars in taxes?
You know the weird thing? I never heard anybody in favour nor against the EPA bring this forward and I think until today the GRA has never worked out a plan to avoid this future problem.
We can all agree on one thing, nobody likes to pay taxes, including me.
I will try to avoid, within all legal means to pay tax, but we all like and need, good roads, access to power, clean water, a working health system and many other things.
Ghanaians are “world” famous in stating: “the government should come to our aid” but a fact is that they can only do that if you pay your taxes.
GRA, you have a lot to learn, time is running out, if our President will ever see, which I would also love to see: A Ghana that will be independent of foreign aid, you have to act quickly, because time is running out.
By Nico van Staalduinen, Executive Director European Business Organistion-Ghana
