Bawumia’s tax overhaul - good idea
Vice-President and the flagbearer elect of the ruling governing party, Dr Mahamudu Bawumia, made an audacious policy statement over the past few days; proposing a complete overhaul of the current tax when given the opportunity to become President in 2025.
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Among some of his proposals are: tax amnesty for businesses and the introduction of a flat rate duty rate in the local currency instead of the current dollarised duty charges.
"The current tax system is confusing, and traders struggle to calculate their payments," remarked Dr Bawumia. "Additionally, many traders face harassment from tax officials, which should not be happening. Those already paying taxes should not be subjected to regular harassment," says Dr Bawumia.
"I am proposing a new, simplified and transparent tax system," Dr Bawumia stated. "If elected President, I will introduce this new regime in 2025, starting with granting tax amnesty to businesses to provide a fresh start and support for businesses,” he added when addressing some business people recently.
Having known the Veep from his days at Bank of Ghana, we have no reason to doubt his transformative agenda for the country.
There are those who question his sincerity and are very sceptical of the Veep’s proposal, pointing to his role as the Chairman of the Economic Management Team over the past 7 years.
And they have every right to doubt it. After all, we live in a free society where ideas must flourish and genuine criticisms enhance good governance.
Indeed, there were those who doubted the idea that a national health insurance scheme was only but a dream and free secondary education was only but a myth.
Irrespective of the challenges these two social interventions are facing today, there is no doubt that it has made significant inroads in our national lives.
It is within this context that Graphic Business is of the view that Bawumia’s proposal is doable and applicable.
Many business owners will tell you that paying taxes is like being dragged to a butcher’s shop. It is as though the tax authorities are just waiting patiently for you to default and come blazing with their full armory of threats and/or sanctions.
Bawumia was dead on when he analysed the current tax regime as “complex, confusing and burdensome for businesses in determining their tax obligations transparently.”
The idea to also “cedilise” import duties at the ports is an important one. Concerns have been raised about imports and its impact on our inflationary pressures.
For many businesses, such as Graphic Communications Group Ltd for instance, all our major inputs are imported. Newsprint, ink, spare parts, vehicles for delivery etc etc. One can imagine the exchange rate losses we make year-in and year-out in a very highly competitive media market where margins are on a continuous downslide.
The proposal to pay import duties in the local currency is one that needs to be given all the needed push. For a country where the Central has had to warn businesses not to advertise sales of their goods in foreign currency, it is irrational for government to charge for its services in foreign currency.
A few questions also arise from the Bawumia proposal. For instance, how does Bawumia intend to the bridge revenue gap with his tax amnesty policy within the framework of government’s three-year programme with the IMF.
Should we not be focusing on import substitution so as to make the economy a production driven economy?
Overall, Graphic Business is of the strong view that the overhaul of the tax regime is long overdue. However, we shudder to think that the “human factor” should be place at the heart of its operationalisation.
The human element is core to the success of a new tax regime that will ensure a fair balance in tax compliance and enforcement. Overall, Ghana must win.