Dr. John Ampontuah Kumah
THE MINISTRY of Finance is to introduce new policy interventions on domestic revenue mobilisation aimed at improving effectiveness of taxpayer services and reducing non-compliance with tax obligations.
Deputy Minister-designate for Finance, Dr. John Ampontuah Kumah, who gave the hint, said the policy interventions – one of which would be called the Revenue Assurance Compliance and Enforcement (RACE) – would be potentially most effective.
Ghana’s tax collection is said to be low compared with other lower middle-income countries, and the nominee believes “the idea of efficient revenue mobilisation is critical for our country, especially for our development financing and the statistics show that 90 per cent of our working population is in the informal sector.”
Answering questions at the sitting of the Appointments Committee of Parliament, Dr. Kumah indicated that any country that lacks an effective way of collecting taxes in the informal sector tends to lose “a lot in terms of efficient revenue mobilisation.”
“In this country, one observation one can easily make is that when you sell in the night you don’t pay tax and there is a huge night economy in our country,” he noted, and added that “we really need to have new interventions which I am happy to suggest to my Hon. Minister.”
“There is a new programme coming called the Revenue Assurance Compliance and Enforcement (RACE) and these are some of the key innovative ideas that are coming up for us to be able to take more from the informal sector for our national development,” he disclosed.
Non-compliance of tax payments, according to experts, is an urgent issue in Ghana, as the government has been suffering from a widening fiscal deficit and a rising debt burden.
Dr. Kumah said the state of Ghana’s debt as given in the budget and confirmed by the Ghana Annual Debt Report was GH¢291.6 billion, which was 76 per cent of the GDP as at December 2020, and pledged his commitment to support the Finance Minister with potential interventions that could improve tax compliance.
He took the opportunity to explain why the government and the International Monetary Fund (IMF) have different figures regarding the national debt, intimating that the international finance institutions had different methods of reporting public debt.
“We have the general method which is usually wider and central government reporting which is what all governments in Ghana have been using.
“If you use the general government reporting you are likely to include certain specialised contingent liabilities like the financial sector clean up, the energy sector liabilities, and it tends to increase the public debt figures,” he explained.
The IMF has put the country’s public debt at 78 per cent, representing GH¢304 billion and the nominee said the issue of public debt was of concern to every Ghanaian, adding that “in most cases when we raise these questions people want to see what we have done with the borrowing.
“The important thing is that at all times you have to disclose these liabilities. Like the Minister of Finance said when he appeared before this committee, we are going to consolidate the different lines of reporting and I believe this issue of difference in figures will be resolved.”
By Ernest Kofi Adu, Parliament House