Gov’t seeking critical mass of tax registrations

In the face of increasing calls from corporate Ghana for a widening of the tax net, rather than further deepening it, government is seeking to secure a critical mass of Tax Identification Number (TIN) registrations, before commencing implementation of its plan to insist on evidence of tax registration and actual payments before tax – eligible businesses and households can access public goods and services.

Earlier this year, government announced this plan as its strategy to force businesses and households that have not yet been caught in the tax net to begin paying income taxes regularly.

Currently, only about 1.7 million Ghanaians, out of an estimated 10 million, are registered tax payers. Statistics as to how many enterprises and individuals have registered and been given TINs since the campaign began are not available to the public. However, public policy analysts and commentators are irked by the fact that the implementation of the policy of blocking access of those without TINs to public goods and services – such as free education in public schools, vehicle registrations and drivers licenses, and even electricity and water from state owned utility companies – is yet to commence.

But a highly positioned source at the Ministry of Finance has explained to Goldstreet Business that government wants to get as many people registered as possible before commencing implementation because of fears that when it starts, eligible potential taxpayers will try to avoid being registered. Currently TIN registration is not being accompanied by direct demands for tax payments and so people are willingly registering.

Another reason for government’s delay in commencing policy implementation is that it feels it would be unfair to start taxing those who voluntarily registered early, while those still avoiding registration are not having to start paying yet. “When the policy implementation begins all first- time income tax payers will start paying at the same time, thus creating a level playing field for everyone,” Goldstreet Business’s source explained.

Besides these considerations, there are also logistical challenges to be overcome, as the TIN register will have to be linked to both the national ID card system which is only now starting to be rolled out, as well as the digital address system which was only introduced recently.

This means that expansion of public expenditure in the 2019 budget – or at least the early part of it – will have to be financed by further deepening of the income tax net, rather than significant widening. This will include a further raising of the tax rate for the highest income earners to as high as 35 percent.

By Toma Imirhe