Personal income tax rate has been reduced by 67.7 per cent in the 2016 budget, a Tax Policy Advisor at the Ministry of Finance (MoF), Dr Edward Larbi-Siaw, has said.
He said government in line with its social democratic principles had reviewed the income tax thresholds from a minimum of GH₵1,584 to GH₵2,592, in spite of the drawback in personal income tax rates in the country.
“The first GH₵1,584 to the last exceeding GH₵31,680 has been in existence for the past three years. If we are able to get more people paying our personal income tax, we should be able to revise these rates. If there is excess expenditure over revenue, it has to be funded, domestic borrowing or external and if we borrow domestically, we disadvantage the local entrepreneurs and also the interest rate will go up,” he said at a post budget forum for members of the Institute of Financial Journalists (IFEJ) and the Parliamentary Press Corps in Accra.
He said if at least six million Ghanaians should be paying tax from the current four million, out of a population of about 27 million, it would reduce the tax burden.
“Let me be plain, if we are not able to increase the numbers we are unable to reduce the burden. Currently, the income tax contribution figure is at GH¢4.1 billion so if there is a double of this, you can imagine what it can do. So as a nation, let’s mount a campaign that everybody must pay his or her taxes,” he said.
Getting the population to pay their taxes
Dr Larbi-Siaw said poverty was a bar to taxation but not illiteracy as people believed and that most countries relied on their citizenry for information on tax evaders but unfortunately the case was different in Ghana.
“We know those who are not paying so why should we sit down and be paying for others? It is this Ghanaian rhythm I’m still trying to understand. You journalists are part of the people who can bring change,” he said.
He said the ministry was working on an existing system which demanded that by law every Ghanaian with income above GH¢2,592 was to file a return and if implemented would help. 
Budget on closing the funding gap
To enhance resource mobilisation, government introduced a number of tax policy and administration to enhance efficiency in tax administration, compliance and increase tax revenue.
The budget states that efforts are being made to extend the Tax Identification Number (TIN) to other sectors to facilitate the identification of eligible taxpayers. Eventually, the TIN will form part of the relaunch of the National Identification Number initiative to serve multiple national requirements.
Commercial vegetable production
A Technical Advisor to the Ministry of Finance, Dr John Kofi Baffoe, said the ministry would work with the Ministry of Agriculture to set up Green House Capacity Building and training centres for the production of commercialised vegetables.
He said there would be centres of excellence where small and large scale farmers would be trained to produce specific varieties for the value chain and that the initiative would complement the work of agriculture extension officers.
“The principle is that agriculture is going to be seen as a business and not the usual small scale production. We are going to have training centres in the country to train agric graduates, women and youth in commercialised, modernised vegetable production. They will be trained and possibly be given seed money to start with,” he said.
Subvented agencies
Mr Baffour said some state owned enterprises (SOEs) were identified to be capable to exist on their own without subvention from government, and so they were going to be turned into companies.
“The Driver Vehicle and Licensing Authority (DVLA), Environmental Protection Agency (EPA), Energy Commission, Gaming Commission, Securities and Exchange Commission (SEC), Data Protection Commission, all these will eventually be turned into companies where they will run as business,” he said.
He added that potential ones to be eventually weaned off are the Ghana Broadcasting Corporation (GBC), Ghana Standards Authority (GSA), teaching hospitals, all tertiary institutions, Forestry Commission, Minerals Commission, Ghana Investment Promotion Centre (GIPC), and the Food and Drugs Authority (FDA). GB
writer’s email: ama.baafi@graphic.com.gh
Pull Quote
If there is excess expenditure over revenue it has to be funded, domestic borrowing or external and if we borrow domestically, we disadvantage the local entrepreneurs and also the interest rate will go up.
Key note
To improve the fairness, progression and also provide tax relief to the minimum wage earners, the existing minimum income which is exempted from income tax will be increased from GH¢1,584 to GH¢2,592.