Former Finance Minister Seth Terkper has voiced strong opposition to the proposed tax amnesty policy by the flagbearer of the New Patriotic Party (NPP), Dr Mahamudu Bawumia, describing it as populism.
Dr. Bawumia in an engagement with the Ghana National Chamber of Commerce and Industry said the prevailing tax regime is structureless and lacks innovation which makes it burdensome for individuals and businesses to comply with. He thus declared that when given the nod as president, he will role out tax amnesty for both individuals and businesses.
But speaking on the Good Morning Ghana show on Metro TV, Seth Terkper highlighted concerns regarding the lack of transparency surrounding the previous tax amnesty introduced in 2017 under Act 955.
He emphasized the importance of assessing the effectiveness of past amnesties before considering another, urging for clarity on its success and impact on revenue collection.
“The government introduce tax amnesty in 2017 under Act 955 but there has been no accountability from Ghana Revenue Authority or government about its success to parliament”
“Now we are going to do another amnesty? We are falling into the trap which stops many countries from using amnesty”
Terkper warned against the pitfalls of frequent tax amnesties, citing the phenomenon of “raise to bottom in taxation” where taxpayers anticipate regular amnesties and delay compliance accordingly. He advocated for alternative measures within existing laws, such as allowing non-compliant taxpayers to settle their obligations directly with the Ghana Revenue Authority (GRA).
The former minister cautioned against what he termed as “populist amnesty” by the Vice President, stressing the need for evidence-based policymaking rather than relying on politically expedient measures.
“When you do frequent amnesty or amnestys at a certain intervals; firstly Tax payers expect that you come with another amnesty and therefore they wait for the tax to be wiped out, so if we did one in 2017, down the road we’re going to do another one.
Those who have been noncompliance will just wait for next year and whoever wins in December 7 to do an amnesty, which is called raise to bottom in taxation”
“Secondly, through this voluntary compliance, has a certain element of compulsion in it, so is the vice president saying some section of taxpayers must comply whiles others who do not comply, get amnesty, that’s why the difficulty comes in. Many countries have moved away,” the former finance minister explained on Metro TV’s News and Current Affairs program Good Morning Ghana on Friday, March 22, 2024.
Addressing concerns about tax harassment, Seth Terkper underscored the importance of voluntary compliance by businesses, noting that enforcement measures are deployed only when necessary. He refuted claims of widespread harassment, pointing to existing avenues for appeal and recourse against the GRA’s estimations.
Terkper attributed challenges in domestic tax collection to the discontinuation of tax reforms, particularly the halt in the implementation of automation systems in 2017.
He criticized the government’s approach, arguing that reintroducing taxes previously opposed reflects a lack of progress and learning from past experiences.
“It behooves businesses to declare their tax and it’s only when one failed to do that, that the commissioner General will use information at their disposal in the system regarding your history or they’ll look at third party information like supplies from which withholding have been made to gauge your level to estimate your potential tax liability.”
“Another misrepresentation is that these people who claimed they are being harass, you can appeal against the commissioner’s estimation” he explained.
He argued that the said harassment is stemming from stopping the tax reforms phase two, which was started when he was the finance minister.
“The one reason why the domestic tax have become difficult is that, this government discontinued the implementation of the automation system in 2017. The question is why?” he quizzed.
He further clarified that “the phase 2 after the merger of IRS and VAT, was to have a comprehensive domestic tax IT system which will interface with the customs system. But these reforms have been stopped”
The taxes that this same people in government now, fought against, they are bringing them back as if we have not learned anything from kumepreko demonstration, he concluded.
By: Bright Yao Dzakah | Metrotvonline.com | Ghana
