Ghana’s Institute of Economic Affairs (IEA) has sharply criticised the country’s finance minister, Ken Ofori-Atta, for taking a tough approach on revenue collection from individuals yet ignoring the huge revenue gains that could be reaped if his ministry took a tougher stance on revenue collection from corporates.
The Ghanaian government is seeking to introduce new measures to make up its shortfall in revenue for the second half of the year.
Target corporates and banks
Senior IEA economist John Kwakye told a press conference in Accra that the minister’s approach was “misplaced because the tax increases [on individuals] will only worsen the burden of taxpaying households.”
According to the economist, the minister could be more innovative in his attempt to raise revenue and specifically target commercial and financial services companies.
“We are expecting firm action to deal with the several revenue leakages, including trade misinvoicing, transfer pricing, other illicit financial flows, fraud and corruption. Further, ongoing initiatives to formalise the economy to widen the tax net need to be reinforced,” Kwakye said.
Super profits tax
The IEA says firms that make “super profits” in the banking, mining and telecommunications sectors should have been the finance ministry’s targets to make up revenue shortfalls and not, as the finance minister has opted for, consumers.
“Our best efforts to raise revenue will still not yield enough to fund our large expenditure needs. Serious consideration should, therefore, be given to exploiting our vast natural resource wealth in a measured, transparent, efficient and corruption-free manner to build an advanced economy that will benefit current and future generations,” Kwakye stressed.
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