WHAT IS THE PURPOSE OF TAXATION IN GHANA?
The answer seems obvious, the purpose of taxation should aim at the common good of the society.
In recent years the government has been putting a lot of measures in place and thinking of new ways to generate revenue through taxation. A lot of people have offered creative ideas to increase government revenue from taxation and as a result, there has been a lot of tax increments and the introduction of new ones.
The idea that many residents in Ghana do not pay taxes is not completely wrong. A critical study can show that it is obvious and this situation has led to the government brainstorming about how to get many residents to pay taxes.
I ask myself always, what is the purpose of this tax that the government wants whoever is eligible to pay. In simple terms, the government collects money from residents, which is compulsory, and uses the money for the greater good of the society. One aspect of this statement is the collection of revenue which seems to be the focus, and the second aspect is the spending of the revenue.
I believe tax revenue is supposed to bridge the gap between the rich and the poor. Most taxes in Ghana are regressive in practice. The poor bears almost all the burden but very little is done to reduce their plight. Most parts of the country are highly underdeveloped. The gap between the cities and other towns is very wide. It’s no surprise that people keep migrating to the cities. The government can use the tool called tax to reduce this problem.
I would like to introduce you to the income tax act 896. It did make some changes to the previous act 592 and I think you should look at it. Below is a summary of some of the components of it particularly on corporation tax.
Previous Current
• Location Act 592 Act 896
• Accra/Tema 25% 25%
• Other Regional Capitals (except Northern, Upper East
• and Upper West Regions) 18.75% 25%
• Northern, Upper East, and Upper West Regions 0% 25%
• Free Zone Enclave 0% 25%
• Outside other Regional Capitals 12.5% 25%
What is the purpose of this tax structure? It’s obvious the government wants to increase revenue. What happens when the government gets this revenue to the detriment of many parts of the country? There are many parts of the country where the establishment of a company would do so well for them. Yet the government has enacted a tax structure which gives entrepreneurs no incentive to move to deprived communities.
How do many rural communities entice entrepreneurs to establish businesses in their communities which lacks basic amenities when the company will be paying the same tax rate as those in the big cities where roads are better and a lot of facilities exist to make the running of business easier?
Nice piece. Thanks for raising such important concerns and the education. I always love to read from you because you are always on point. Keep it up. You have our support.
ReplyDeleteOur homeland has managed to establish a misplaced priority, amassing money from the poor to help the rich get richer,
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