Tuesday, 30 March 2021

Let’s find solutions to revenue loopholes

  

 

 

In the 2021 budget, the government announced revenue measures in an attempt to rake in more revenue into the government kitty for developmental projects.

 

The revenue measures in the 2021 budget include the introduction of a COVID-19 Health Levy of a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate, a Sanitation and Pollution Levy (SPL) of 10 pesewas on the price per litre of petrol/diesel under the Energy Sector Levies Act (ESLA), and the Energy Sector Recovery Levy of 20 pesewas per litre on petrol/diesel under the ESLA.

Total Revenue and Grants for 2021 is projected to rise to GH¢72,452 million representing 16.7 percent of GDP, up from an outturn of GH¢54,922 million which was 14.3 percent of GDP for 2020. 

Domestic Revenue is estimated at GH¢70,987 million and represents an annual growth of 32.2 percent over the recorded outturn for 2020.

Grants disbursement from Development Partners is estimated at GH¢1,465 million representing 0.3 percent of GDP, reflecting a nominal growth of 19.2 percent over the 2020 outturn of GH¢1,229 million. 

The informal sector accounts for nearly 30% of GDP, but a large part remains outside the tax net. Most of the activities are small in scale, but cannot be completely ignored. 

Our biggest problem as a country with regard to shortfall in revenue is we not plugging the loopholes in the revenue collections. This is our biggest challenge, once we are able to tackle that, some of these taxes they have introduced may not be necessary. We are seeing these new taxes because of the revenue loopholes,


Plugging these loopholes could add over 10% of GDP to our revenue collection. We need to do this as failure would constrain our economy to a low growth path, which will perpetuate our underdevelopment.

Significant amount of revenue is lost through tax evasion, which sometimes occur with the connivance of tax officials. We urge that a strict surveillance system backed by a strong sanctions regime be instituted to deter and minimize the incidence of tax evasion.

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