VAT disadvantages the poor as it widens inequality gap
Adnan Adams Mohammed
The Valued Added Tax, (VAT), introduced as an easy approach
to help government mobilize resources for national development has been
characterized as a retrogressive tax system, which is an inequitable to the
poor who pays the same as the rich in the country.
A tax and development expert is proposing a review of most
of the tax systems especially the VAT on consumable goods and basic services.
The expert further describes most of Ghana's tax system as unfair to the poor
as it places a huge burden on them in terms of revenue mobilisation compared to
the rich.
The Tax Justice Coalition as part of its advocacy to ensure
that; every Ghanaian understands the tax systems, encourage compliance,
discourage tax evasion, tax justice and equitable and transparent distribution
of the tax revenues to benefit the poor and the rich in an equitable manner has
called on all stakeholders (especially the media) to join hands to help it
achieve its objectives. A key member of the Coalition has called for efforts
by government to block loopholes that allowed, especially big and multinational
companies, to evade taxes using several dubious accounting and financial
management systems.
“The VAT is not a good instrument for addressing development
inequalities because it made the poor and the rich to pay the same prices for
goods, a situation, which further widened the inequality gap in the country”,
Dr Steve Manteaw, the Co-Chairperson of the Ghana Extractive Industry
Transparency Initiative has said during a presentation at a two-day capacity
building workshop on tax and public financial management reporting for the
media organized by the Tax Justice Coalition Ghana with support from the Open
Society Initiative for West Africa.
He added that the poor were rather contributing more in
terms of taxes for national development, citing subsidies in the energy sector
which is meant to cushion the poor, rather tended to benefit the rich compared
to the poor as it is in its current state.
He called for a tax system that guaranteed that people paid
taxes based on their economic and income level to help address inequality in
the country.
Meanwhile, the Head of the Ho Small Tax Office (STO) of the
Ghana Revenue Authority (GRA), Mr. Anthony Dekagbe, has said the refusal by
entities to honour their tax obligations is a threat to national security and
must be considered a criminal act.
Key national services, including security, would not
function effectively in the absence of tax revenue, which was also the lifeline
to developmental projects, he said at a tax forum on Voluntary Compliance in
Ho, which brought together sections of the taxpaying public and officers of the
GRA.
“You are a threat to national security if you don’t pay your
taxes. There will be no protection because our security services would not be
paid. Key developmental projects would also suffer,” he said.
Despite tremendous efforts by the GRA in tracking down tax
evaders, he said the goods sector still managed to dodge the tax net. He
assured that, the Authority would continue to collaborate with security
agencies in sealing the loopholes and enforcing tax compliance and would need
more public support in widening the tax net.
Mr Leonard Shang-Quartey, Coordinator of Tax Justice
Coalition Ghana assured of more collaboration with the media to strengthen
their capacity on issues of tax justice to improve media coverage of the
sector.
Some of the participants said while tax avoidance was not a
crime, the processes leading to it such us over-invoicing and under-invoicing
amongst others were crimes and must be singled out for prosecution to help curb
the practice for the country to increase revenue mobilisation.
Also, Mr. Lord Lucas Vodzi, Deputy Coordinator of Tax
Justice Coalition, called for proper communication of tax policies to make the
public and business entities not to view tax officers as enemies.
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