Developing countries in the world have acquired a culture of depending on grants and funds from donor countries and organizations for their infrastructural development and to support their economies’ growth. Such countries are unable to rely solely on funds generated by their tax system to provide for their own citizens.
Tax is a mechanism imposed on a taxpayer by a country to fund public expenditure. Taxes serve as a vehicle the government uses to fund its expenditure on infrastructure such as roads, public transportation, sanitation and education and health care systems.
Taxation offers an antidote to aid dependence from developing countries on donor countries and organizations. What is crippling most economies of developing countries is the process of moving towards simpler, and more transparent tax systems and a broadening of the tax base.
A strong tax administration will form a good foundation for efficient domestic resource mobilization. Tax system operations should be independent of the government. This will allow the Ghana Revenue Authority (GRA) to conduct its operations free from interference to enable the organization achieve its target in terms of revenue mobilization. Mind you, more tax collected means more money for the country to be used for infrastructural development.
Currently, just a fraction of companies in Ghana pay taxes. This is a worrying statistic and this trend has to be addressed with all seriousness. Tax payers should be motivated to pay their taxes. If your money is used for development projects in your communities, which will lead to construction of better roads, solar street lights and a neighborhood security patrol, thus, creating value for your money, why shouldn’t you continue to pay your taxes regularly?
An effective tax system should have accurate records of businesses that have to be taxed and should provide accurate financial accounts at the end of the fiscal year. Likewise, effective and transparent procedures should be implemented to collect taxes from businesses. Digital platforms such as internet portals and mobile-payment options should be made available to allow for simpler taxpayer transactions for individuals and companies.
Such approaches reduce the length of queues at tax offices and help make the taxation system transparent and accountable.
Good governance and political stability will provide a productive environment for domestic resource mobilization to be carried out with flexibility and accuracy. Domestic resource mobilization is the key to economic growth and reducing dependence on donor countries.
It doesn’t mean that Ghana has to implement new taxes or higher tax rates. Governments often see their revenues rise through improved audits or simplified filing processes. This is attainable and can be achieved with improvements in tax compliance and policies that will help the Ghana Revenue Authority perform its function effectively and efficiently.
God Bless Our Homeland Ghana.
Author: Kwesi Otoo, threesixtyGh Writer