Workers need respite on taxes
One of the promises of the new government which Ghanaian workers cannot wait to see fulfilled is a let-up on taxes, as the current tax regime is literally strangulating them.
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Currently, virtually all the money that goes to workers is taxed, including allowances and end-of-service benefits, which are savings made on the earnings of workers during their active work life.
Although workers have cried over the years that the new tax regime is unfair to them as they are being taxed twice on their salaries, nothing has been done about it and workers have had to endure hardship due to the toll of the taxes on their earnings.
The Daily Graphic is not by any means inferring that workers need not pay taxes. Indeed, income taxes have been paid by workers since time immemorial and workers believe that the deductions made from their salaries as their income taxes serve a good purpose.
However, the introductions of other taxes and the increase in the tax rates over the years have not gone without complaint.
Many have asserted that instead of heavily taxing workers, the tax net should rather be widened to include people in the non-formal sector who are evading taxes because many of them are not duly registered.
It is just fair that more Ghanaians are made to contribute to the development of the country by way of tax contributions, since everyone benefits from the infrastructure that the taxes help to develop.
That is why the Daily Graphic believes that the step being taken by the Ministry of Finance to assess the impact of the various tax reduction promises made by the governing New Patriotic Party (NPP) in the run-up to the December 7 general election should gladden the heart of every worker.
We urge the government to critically assess the current number and rates of taxes slapped on workers’ salaries, allowances and benefits and do the necessary adjustments to ease the pressure on the working public, while building people’s confidence in the ability of the economy to sustain them.
According to a tax policy advisor at the ministry, Dr Edward Larbi-Siaw, the assessment of the taxes was also aimed at introducing reforms to improve the ease of doing business in the country.
The review is expected to include the scrapping of taxes such as the 17.5 per cent Value Added Tax (VAT) on financial services and domestic air tickets and the reduction of other taxes such as corporate income tax from 25 to 20 per cent.
While we laud the government for this bold attempt to review some taxes, we pray that the review will not only affect the listed taxes but all other direct taxes such as income taxes, company taxes, capital gain taxes, toll taxes, poll taxes, gift taxes and property taxes, as well as the heavy duties on some essentials and high interest rates on loans, to ensure the development of the country.
We believe that the shortfall from the review will be adequately catered for, if a vigorous attempt is made to reduce the annual loss to the state of nearly US$2.1 billion dollars to tax evasion and incentives as revealed by a study carried out by the Integrated Social Development Centre (ISODEC) last year, and more people brought into the tax net.
