Lazy approach not a panacea to solving revenue shortfall – UG Lecturer

Development Economist, Dr Patrick Asuming, has noted that excessive taxation is not a sustainable way to end the country’s revenue shortfall challenges.

He observes that the “lazy approach” of imposing either indirect taxes or increasing existing taxes to increase revenue would not solve the age-long low fund mobilisation challenge.

Lamenting that successive governments have not performed so well in generating revenue, Dr Asuming said the problem is because “over the years, our government prefers the lazy approach to raising the revenue”.

The Senior Lecturer at the University of Ghana Business School (UGBS) has underscored the need for a revision because that approach would not yield the needed result in increasing the government’s revenue for the myriad of developmental needs.

In an interview with The Ghana Report regarding the 2021 mid-year budget review, he challenged the government to focus more on collecting property taxes, especially from the wealthy people in affluent areas.

According to Dr Asuming, the government’s digitalisation drive has laid the foundation for collecting such taxes and urged the government to capitalise on such initiatives to widen the country’s tax net.

He explained that through the digital addressing system and linking the Ghana Revenue Authority (GRA) database with a third party database, GRA has been able to identity about 5,000 wealthy Ghanaians who have been evading taxes.

READ ALSO: Ghana Revenue Authority Goes After 5,000 Wealthy Tax Evaders

The authority has identified additional 20,000 Ghanaians of high earning professions, including doctors, lawyers, engineers, computer scientists, financial service professionals, executives who have not registered for their TIN through the same mechanism.

This should be the first port of call in ensuring the collection of property taxes, he noted.

“Property taxes should be one of the easiest to collect because when you digitise the property, it does not move.

“So, at the very least, you can be sure that every year this property is there, I will go there and collect the tax. Once properties were digitised with the Ghana Post, I thought that was one of the things they would have started with,” Dr Asuming said.

The development economist then urged the government to reform the property tax rate system and ensure that the owners of the captured properties are paying their taxes.

Aside from property tax, he also asked the government to consider the tax exemption regimes in the country.

In the 2021 budget, import exemptions were GH¢4,011,430,006.

The government could have channelled this amount into other productive areas, he said.

“That amount is more than what we need to pay off all the fertiliser debts,” he noted.

“There are way too many exemptions and discretionary powers for people who can grant exemptions, and we need to stop that because it is a big source of revenue leakage,” he advised.

Because of that, Dr Asuming urged parliament to consider the Tax Exemption Bill, which is to be re-laid in parliament this year. When passed into law and implemented, such a bill would check abuses and strengthen the exemptions regime.

He also asked the government to institute measures to block the loopholes in the spending of public funds by various Ministries, Departments and Agencies (MDAs) and Municipal, Metropolitan, Municipal and District Assemblies (MMDAs).

However, he stated that the COVID-19 has exacerbated the plight of the poor in the country and heightened the pressure on the government to honour its promises to the people, thereby increasing expenditure.

Dr Asuming said, “there are roads to be constructed, schools, hospitals, among others…so you realise there are a lot of things to do in the country, and the fact that the government made one trillion promises to do every single thing, more money would be spent.”

“If you talk in more recent times, the COVID-19 pandemic has also affected our public finances a lot because of the shutdown in economic activities, or the restrictions imposed to contain the pandemic, economic activities fell, and when economic activities fall, it affects both the revenue and expenditure,” he noted.

He, therefore, urged the government to be prudent with its expenditure and ensure that borrowed money was used to support businesses to increase their production, which would lead to expansion and more employment.

“If you borrow for businesses to expand what they do, that is good because the businesses would generate more profit and pay more corporate tax, and also employ more people, leading to extra people paying tax,” said Dr Asuming.