The Green Tax Youth Africa (GTYA), a tax advocacy group, has commended the government for introducing the modified tax system to improve taxation compliance and revenue collection in the informal sector.
Mr Benaiah Nii Addo, Executive Director of GTYA, who gave the commendation, said the initiative reflected a strategic effort to address Ghana’s long-standing revenue mobilisation gap in the informal sector.
He was speaking to the Ghana News Agency in an interview in Kumasi, on the Modified Tax System, recently introduced by the government through the Ghana Revenue Authority (GRA).
The Modified Tax System taxed workers in the informal sector with turnovers below Gh¢ 20,000, between Gh¢25 and Gh¢45, while those with turnovers from Gh¢20,000 to Gh¢500,000, are taxed three per cent of their turnovers.
This strategy is to ensure fairness in domestic revenue mobilisation for workers in the informal sector, while easing the burden on the formal sector.
Mr Addo described the initiative as timely and progressive as over 80 per cent of Ghana’s revenue potential was tied to the informal sector.
He envisioned that, there would be a great transformation of Ghana’s fiscal space and development path if the new system was properly implemented and supported.
“The informal sector remains the bedrock of Ghana’s economy and revenue potential.
Strengthening tax administration will enhance compliance in this space and can significantly close the fiscal gap and drive inclusive development,” Mr Addo added.
He commended the GRA for exhibiting a strong governmental response to a persistent call from stakeholders to widen the tax net for equity and inclusive domestic revenue mobilisation.
Mr Addo called on Civil Society Organisations, academia, private sector leaders and international development partners, to support the government in building a more equitable and fiscal framework, grounded in justice, efficiency and sustainability.
He urged the government to study the performance of the Modified Tax System for constant review, so that if it did not achieve its purpose within six months of implementation, it could go back to the board.
“Taxes must be progressive for everyone to pay their fair share towards national development,” Mr Addo stated.