Decouple tax from budget - Andani urges govt

That, he said, will make room for a holistic discussion on tax compliance which will inform the government of its expected tax revenue before the annual budget is presented to Parliament.

Mr Andani explained that such a move will also help the government to plan its expenditure with a clear understanding of how much revenue it can generate domestically.

He told the GRAPHIC BUSINESS in an interview at a post-budget forum organised by Tax and Audit consultancy PricewaterhouseCoopers (PwC) in Accra on November 19.

The government has estimated to raise some GH¢57.8 billion domestically next year but the amount is about GH¢12 billion more than what the government can collect from tax and other non-tax revenue in 2019.
 
Of the amount, non-oil tax revenue was expected to rake in about GH¢42.9 billion, reflecting the impact of expected improvement in tax compliance and reforms in revenue administration.

Mr Andani explained that since the government will rely on revenues from taxes to execute its projects outlined in the budget, the two conversations should not be advanced at the same period.

He noted that the conversations around tax were the first to have ahead of the budget.

“A nation state means that the firms and individuals have agreed to be governed by some rules and laws which from time to time we elect governments to manage so the first expenditure on anybody’s list is the tax; the law says that your employers have to pay your tax first.

“Therefore, anyone who makes an income has the first obligation to pay tax to the state so the conversation around taxes should be made before we even say we have given the government an amount of money and expect certain output from them, “he said.

Mr Andani, who is also the President of the Ghana Association of Bankers (GAB), further explained that the conversation around taxes must be decoupled from the budget “else the budget becomes a wish list where government has made commitment towards projects but they don’t know where the money is coming from, that’s not the way to run the nation,” he said.

An Associate Director at PwC, Mr Abeku Gyan-Quansah, who spoke at the forum, cautioned the government not to rescind on its decision to focus on tax compliance to boost domestic revenue mobilisation.

“We need to really focus on tax compliance; otherwise we may not be able to achieve that particular target,” he said.

He explained that although the government outlined in the 2018 budget certain plans to boost domestic revenue mobilisation, the audit firm could only score the government 50 per cent in terms of meeting those plans.

“The government outlined certain plans in the last budget but as far as PwC is concerned, when it comes to the direct tax related laws that ought to be passed, we are saying that the government has scored nine out of 10 but going through the indirect tax related changes, five out of six and finally in terms of tax administration measurers we have two out of four which gives the government about 50 per cent,” he said.
 
He, therefore, encouraged the government to apply alternative dispute resolution mechanisms to settle tax issues and focus a lot more on ensuring that modified taxation which had been on the country’s law books since 2016 was implemented. — GB