Replace tax cuts with realistic sources of revenue - Analyst

A tax consultant William Owusu Demetia said the Nana Addo administration risk financial dip if it does not device new ways of generating revenue after the tax cut.

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The Nana Addo-led government promised during its campaign ahead of the 2016 elections to reduce taxes if they were voted into power.

But William Owusu Demetia said “government has two options; it has to either find another item that has not previously been taxed to impose the taxes on or pursue defaulting tax payers to pay their taxes. By this the tax compliance could increase from about 50 to 70 percent.”

Speaking to Accra-based Citi FM, William Demetia said the Nana Addo administration risk financial dip if it does not device new ways of generating revenue after the tax cut.

“This will enable government get revenue from the additional twenty percent to compensate for a drop in the rate that they are proposing.”

“Government has to be able to ensure that its revenue basket is not reduced; it has to be maintained or improved,” he explained.

Taxes such as the 17.5 percent VAT on financial services and domestic air tickets would be scrapped while others such as corporate income tax would be reduced from 25 to 20 percent.

Also, the special import levy, 17.5 %  VAT on imported medicines not produced in Ghana, 5% VAT on Real Estates are expected to be abolished under the NPP government.

Meanwhile, the 17.5% VAT for small enterprises is expected to be reduced to 3% flat rate.

These campaign promises have recently been reiterated by the Finance Minister-designate Ken Ofori Atta.

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