Govt to rake in informal sector tax with new programme – John Kumah

John Kumah, deputy Minister-designate for the Ministry of Finance
John Kumah, deputy Minister-designate for the Ministry of Finance

John Kumah has said government will soon introduce programmes for taxing the informal sector

•He named Revenue Assurance Compliance and Enforcement as one of the programmes

•He said this when he appeared before Parliament’s Appointments Committee

A deputy Minister-designate for the Ministry of Finance, John Kumah, has hinted of plans to effectively tax the country’s informal sector.

Addressing Parliament’s Appointments Committee, Mr Kumah said his outfit has rolled out Revenue Assurance Compliance and Enforcement (RACE) program plus other programs to ensure government taxes the informal sector in the coming years.

He believes government will continue to experience revenue shortfalls if the informal sector taxes are not collected.

“The idea of efficient revenue mobilization for our country is critical especially for our development financing, and the statistics show that 90% of our working population are in the informal sector. So if you don’t have an effective way of collecting taxes in the informal sector then you are losing a lot. We really need to have new innovative interventions to help tax things like night business.”

“We will introduce the Revenue Assurance Compliance and Enforcement (RACE) program which will contribute to helping in taking more from the informal sector to support national development,” he added.

Over the years, Ghana’s budgets have suffered perennial deficits partially on account of low domestic tax revenue mobilisation.

Whilst this downside has several facets, one of the foremost remedies is protecting the domestic tax base.

The concept of the informal sector with its tax liability is considered as a social model mainly used for small, medium and micro enterprises (SMMEs) that are quite difficult to be captured by the operations of tax authorities (ILO, 1972).

Although the informal sector is the challenge around which the intended widening of the tax net could be achieved, it plays an important and controversial role.

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