Mrs Abiola Bawuah, the United Bank for Africa’s Regional Chief Executive Officer for West Africa, has urged Ghana to use technologies to draw in informal sector players into the tax net.
According to her, “going digital” would enable the government to raise more revenues from the large informal sector business operators to undertake its development projects for the people.
Mrs Bawuah made this known at an economic forum organised by Danquah Institute, a pro-government think tank on the theme: ‘Bridging the gap between the formal and informal economy, the role of domestic revenue mobilisation in an era of Ghana Beyond Aid’, held in Accra, on Friday, 10 May 2019.
Mrs Bawuah who shared a panel discussion with the Commission-General of the Ghana Revenue Authority (GRA), Emmanuel Nti, Commissioner of Customs of GRA, Isaac Crentsil, tax expert, Dr Alexander Ampabeng, and the CEO of the National Identification Authority (NIA), Professor Ken Attafuah, maintained: “For as to improve on tax collection, digital is the way to go”.
She also used the occasion to stress on the need for government to put in place strong internal control measures to monitor tax collection and its proper usage to encourage more people especially the informal sector operators to pay taxes.
“We need to have strong internal control measures to monitor tax collection. So, we need to invest in digital tax collection.”
Mrs Bawuah told the Ghanaian government to double incentives for taxpayers particularly those in the formal sector to motivate them to pay.
A professor of Economics at the Kwame Nkrumah University of Science and Technology (KNUST), Eugenia Amporfu, who chaired the forum, advocated the use of simple technologies such as mobile money for the payment of taxes in the country, especially in the informal sector.
Such a system, according to her would make it easier for people in the informal sector to pay their taxes with ease.
Informal sector total revenue
The Commissioner-General of the GRA, Emmanuel Nti, noted that the country’s informal sector contributes just one per cent to the total tax revenue.
He explained that the total tax revenue for the informal sector is mainly captured under the self-employed category, which makes “just about a percentage” of total tax revenue.
Ghana’s Finance Minister, Ken Ofori-Atta said close to 55 per cent of Ghana’s tax revenue is consumed by interests on loans, alone.
In 2018, Ghana “raised GHS37.8 billion in tax revenues and spent GHS21.1 billion to service our loans – and by that, I mean, interest payments alone”, he added.
The less revenue the country generates, Mr Ofori-Atta noted: “The more we will have to spend because arrears and interests accrue and our maintenance culture suffers”.
With the informal sector estimated to be more than 60 per cent of the country’s economy, it means a large chunk of revenue which could have been collected from that sector is left uncollected.
The informal sector is made up of businesses – across all sectors – which are not registered with the Registrar-General’s Department (RGD) and do not keep formal accounts, per the definition of Ghana Statistical Service.