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Expand Tax Net to Boost Revenue – Economist advises government

Development Economist, Dr. George Domfe, has advocated for an expansion of the country’s tax net to boost revenue generation as efforts are been made by the management of the economy to resolve the current economic difficulties facing Ghanaians.

Speaking in an interview, he said widening the tax net was one of the most appropriate things the government could do to salvage the current economic challenges.

He said, “A lot of Ghanaians do not pay tax. Masons, tilers, plumbers, and a host of workers who find themselves in this industry make a lot of money but how many of them pay taxes to the state”.

He stated that the government could have generated a lot of money from properties if people residing in prestigious areas such as East Legon among others paid their property taxes as pertains in other developed countries.

He, however, maintained that governments over the years have failed to put in place mechanisms to generate revenue although attempts have also been made to generate revenue for the state.

“We have said we want to widen the tax net but it is not just so easy, theoretical understanding of widening the tax net is different from practice as we are made to believe,” he added.

Dr. Domfe who is also a Senior lecturer at the University of Ghana said that fighting corruption does not necessarily translate into economic stability if the government fails to put in place measures aimed at addressing it even though the state may be desirous of the need to generate revenue for development purposes.

In his view, the current VAT rate of 12.5 percent expected to be increased should be supported by all Ghanaians given the economic difficulties and numerous wage bills the government had to pay each year.

He explained that the government for instance had to generate over 35 billion cedis to service a debt of 68 billion accumulated by the past government coupled with government expenditure on the salaries of workers.

He, therefore, asked the Finance Minister to consider an upward adjustment of VAT as one of the best options to help generate some form of revenue for the government.

He stated “If I am a finance Minister, and think of the country then the best thing to do under this circumstance is to increase VAT.

“If we don’t want to face a more difficult challenge as we are currently going through then we need to increase the VAT rate. Let’s people not play into the gallery, the truth is that avoiding any upward adjustment of the VAT rate will compound the already difficult economic challenges facing the country”.

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