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Economist blames low GDP on poor data covering informal sector workers

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Financial Analyst and Economist, Mr. Daniel Amateye Anim, has stated that the challenges regarding tax collection in the country are a result of the poor structure of data on persons working in the informal sector.

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His comments come after the Director of the Institute of Economic Affairs, Dr. John Kwakye, expressed concern about Ghana’s GDP.

Dr. John Kwakye was unhappy that other countries were recording high GDPs in taxes whereas Ghana’s revenue from taxes was low.

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Earlier, Finance Minster, Ken Ofori Atta disclosed during the 2021 mid-year budget review that the country had missed its half-year revenue target by about 13 percent.

According to him, total revenue and grants generated for the first six months of the year, thus between January to June, amounted to GH¢ 28.3 billion as against the programmed targeted amount of GH¢ 32.4 billion.

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Speaking to UniversBusiness, Mr. Anim explained that going digital is key to resolving the issue of inaccurate data on persons in the informal sector.

He said, “The challenge that we have as a nation has to do with the structure of the economy. We do not have accurate data of people operating in the informal sector of the economy. We have so many people in the informal sector that are making so much money that it is difficult for the government to address.”

He continued, “I think the digitization drive should serve as a solution going forward, where we will be able to identify every business unit, every business entity, and be able to task them,”

Mr. Anim also highlighted that corruption, as well as the lack of implementation of the provision of incentives to taxpayers, are among the challenges contributing to the difficulty in Ghana’s tax system.

“There are a number of taxes that GRA and for that matter, the local assembly, are finding it difficult to collect. Number one has to do with property tax. For instance, if you take Accra, the kind of buildings that are located at our Cantonments, Ridge, East Legon, etc; if we should collect property tax, that one is enough to be able to cater for the road network within Accra. But we are not collecting it. This is principal because most of those houses are owned by the so-called ‘Big men’ in society, and they are the very people that are in the affairs of managing the economy. But it is an area that if it intensified, like any other jurisdiction, we should be able to mobilize more revenue,” he mentioned

He added that:

“Another area when you check our tax system is that the incentives are there on paper, but in terms of implementation, they are lacking. In other jurisdictions, why people can easily go and file their tax returns is because, at the end of the fiscal year, they can receive their tax returns, that is, concerning whatever the system promised them. But ours is only focused on collecting taxes without necessarily making efforts to reward those who pay taxes even though it is in the book.”

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