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Similar to The Citizen Card - Improving Voluntary Tax Compliance in Ghana (20)
The Citizen Card - Improving Voluntary Tax Compliance in Ghana
- 1. By: Yaw Brako Osei-Tutu Date: December 10, 2015 Email: [email protected] A presentation completed as part of coursework requirements for the World Bank MOOC on Coursera titled “ Financing for Development: From Billions to Trillions to Action”
- 2. Ghana is a lower middle income country with a population of about 25 million located in West Africa Like many other developing countries Ghana has a very huge informal sector, representing about 80% of the economy Income tax revenue mobilisation over the years from this shadow economy has proved a very formidable challenge for the government Given the central and significant role of public finance in financing development, this challenge must undoubtedly be overcome if Ghana is to realise her economic aspirations Background
- 3. Informal sector workers comprise petty traders, farmers, fisher folk, carpenters, masons, plumbers etc. whose incomes are irregular and difficult to assess Record-keeping is either poor or non-existent Although initiatives such as tax stamps have been introduced, patronage remains very low as few citizens willingly make good their tax obligations Monitoring and enforcement of compliance in this sector is complicated and overly costly as locating taxpayers is problematic as a result of a lack of residential addresses and poor urban development New methods have to be explored to address this formidable challenge The Problem
- 4. Few people willingly pay their taxes because they are unable to see the connection between contributions they make and benefits they receive In Ghana where infrastructure services are very inadequate, people would pay for private operators to deliver water to their homes but do not see how tax revenues subsidise the operations of the national water treatment and distribution company People would pay for treatment or medication from a private healthcare facility for example but do not understand that tax revenues are used to fund public health programmes such as vaccinations People would pay for private education but wouldn’t appreciate how tax revenues subsidise public education It is quite difficult to see how TAXES paid translate into BENEFITS for everyday people; this is more so when you have a large and poorly educated populace The Problem
- 5. Question: How do we link TAXES and BENEFITS? Answer: The Citizen Card! The citizen card will be a card much like an ATM card with national ID information. You would be able to pay your taxes by purchasing scratch cards and sending an SMS to a short code with your mobile phone, very much like recharging mobile phone credit. There is a very high mobile phone penetration in Ghana as is the case in many developing countries which have leap frogged to contemporary technologies and skipped legacy systems Holders of a citizen card would be entitled to discounts on public goods and services at the point of access The Idea
- 6. Reasonable predetermined flat tax rates have already been developed for informal sector workers by the Ghana Revenue Authority A petty trader, for example, who is a holder of a citizen card, upon enrolling her daughter in a secondary school would benefit from a considerable discount in school fees if she makes good her tax obligations The Idea
- 7. The citizen card is a rough very early-stage concept I have Naturally, operationalisation of such a system would have many technical, logistical, financial and managerial challenges I believe, however, that such a system is worthy of further discussion and development given the importance of public finance in the development finance mix Conclusion
- 8. Ghana Revenue Authority (GRA) - http://www.gra.gov.gh/docs/info/faqs/faq_income_tax.pdf Understanding the Tax Paying Behaviour of the Informal Sector Towards Improved Public Revenue Mobilisation - http://balme.ug.edu.gh/index.php?option=com_content&view=articl e&id=207&Itemid=240 GRA widens tax net with scheme for informal sector - http://business.myjoyonline.com/pages/news/201207/89687.php Bibliography