Amnesty will not address problems with Ghana’s tax system – Economist

A Professor of Economics at the University of Cape Coast (UCC), John Gatsi, has voiced skepticism regarding the proposed tax amnesty put forth by Vice President Dr. Mahamudu Bawumia.

Prof. Gatsi doubts that this initiative will effectively increase tax compliance or tackle the underlying challenges associated with tax collection.

Dr. Bawumia, the presidential candidate of the New Patriotic Party (NPP), has pledged to introduce a tax amnesty alongside a simplified flat tax system, aiming to foster a more straightforward and favorable environment for both citizens and businesses.

This proposal, outlined during a speech at the University of Professional Studies, Accra, entails implementing a flat tax structure based on a percentage of income for individuals and Small and Medium Enterprises (SMEs), which constitute the majority of businesses in Ghana.

The plan also includes provisions for exemption thresholds to shield low-income earners and guarantees a streamlined corporate tax framework and VAT system.

However, Professor Gatsi challenges the efficacy of this approach, asserting that it fails to address the core obstacle in tax collection within the country.

He contends that the primary issue lies in the lack of citizen commitment to voluntary tax payment, driven by a perceived absence of direct benefits.

In an interview with Umaru Sanda Amadu on Eyewitness News, Professor Gatsi advocated for a shift in focus towards improving public services as a means to incentivize tax compliance.

He posited that enhancing the quality and accessibility of public services would instill confidence in citizens regarding the tangible returns on their tax contributions, thereby fostering a culture of voluntary compliance.

“Even if you give everybody tax amnesty for which everybody should start afresh, that will not bring about any change because that is not the main problem of tax collection in the country.”

“The main problem is that people are not committed to the payment of taxes if they are supposed to voluntarily declare to pay taxes because it does not commensurate with the provision of public infrastructure for the people. Public transport is not the best. Access to public services is not the best for most people in Ghana, therefore they don’t see why they should be paying taxes. Those are the issues that should be addressed,” he said.