Tax Reform Agenda

 

 Tax reform agenda have been traditionally focused on the increase public revenues in an economically efficient manner. However, Prichard (2010), argue that there is a case for linking revenues enhancement more explicitly to broader government objective.It should also been noted that increased domestic revenues generation will only lead to improved development outcome if new revenues is translated into productive driven sector.

   In Ghana  for instance,Tax reform was introduced in 1983 as an instrument for accelerate growth, reducing poverty and dependence on aid to finance  government expenditures.The critical issues has been generating revenues using tax instrument that are least harmful to the poor.The current tax reform focus on two component of taxes, thus direct taxes and indirect taxes.Studies of the distributional impact of the tax in Ghana suggest that direct tax are most poverty-friendly while indirect tax have effect on the poor. 

Budget statement recognize excessive degree of fiscal rigidity as a major use of country fiscal difficult and has propose a measure to address it through tax reform.The current government of Ghana have initiate a number of measure to direct its tax policy toward the achievement of

• Tax revenues mobilization. In light of this, the government has propose a number of measure to increases revenues to strengthen tax administration, monitor tax incentive, broaden tax base, combat tax evasion and to guard against revenues linkage

•  To boost industry performance sector through abolished and removal of number of taxes with hope of reducing the cost of doing business and to increase revenues from increasing activities.

• To attract more foreign Direct Investment toward the economy recovery  through investment, expanding existing business and to create sustainable jobs opportunity with aim of stabilize the overall economy prospects.

    A reviews of tax legislation reveal that most proposed tax to be abolished, review and and removed were introduced in the past four years. Others tax policy initiative that will be pursued in 2017 to meet government productive driven economy agenda are as follows

Direct Tax

•    Intensify transfer pricing audit for  international company
•    Conduct integrated audit for for free zone and specialisez sector
•     Tax incentive and credit for company that hired gradaute
•     Improved informal sector taxes through national identification scheme
•    Introduce a two years stamp duties waiver to support re-capitalization of finance sectors

Indirect tax

•  Abolished 17.5% VAT on financial service sector, selected imported medicine, domestics airline and 5% vats on real estate sale
•  Abolished duty on importation of spare part and special import duties
• Reduce special petroleum tax on petrol from 17.5% to 15%
• Replace 17.5% vats on trader by 3% flat rate.

    Other taxes credit and incentive, have been given to company intended to operate and establish business provided they meet certain condition.However, question have been raise as to how this tax policy initiative  will mean to business community and the  consuming public.

   Business community will have to re-assess their business operation to see if the new tax policy bring new relief or uncertainty toward their operation and establishment in Ghana.Consuming public will likely to asses the impact of tax policy on their daily activities and how this initiative reflect on good and services they consumes daily

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