Tax Policy Advisor of the Ministry of Finance and Economic Planning (MoFEP), Dr. Larbi Siaw, has said that the government will work assiduously to broaden the tax base in order to ensure that existing tax rates are increased only when “warranted”. “Ghanaians are not ready for increases in tax rates. If we broaden the base and maintain the rates, we shall only increase tax rates when they are warranted. The world is now a global village and we are cooperating on all levels,” Dr. Larbi said. He was speaking at a sensitisation programme on Foreign Account Tax Compliance Act (FATCA) organised by Ernst and Young (EY) in Accra. Dr. Siaw indicated that government will seek a reciprocal arrangement that enables it to broaden its tax base as local banks comply with FATCA rules in July 2014. “The MoFEP and GRA will benefit greatly. If we get our financial regulations right, in addition to our foreign obligations I believe we will benefit greatly. If we get our financial regulations right, in addition to our foreign obligations I believe we will continue on the path we have chosen to broaden the tax base", he said. The government's budget deficit rose by almost three-fold in 2012 to 11.8% of GDP, fuelled by excessive spending on public wages and energy subsidies. Earlier this month, Parliament passed a fiscal stabilisation levy and additional import levies to plug the deficit, which is forecast to narrow to 9% of GDP in 2013. This year the GRA has been tasked to collect GHC 15.6 billion for the state, with GHC 7.4 billion expected from domestic direct tax, GHC 2.2 billion from domestic indirect tax, and almost GHC 6 billion from customs. One of the taxes which have generated a lot of debate is the Customs and Excise Amendment bill, 2013 that reimposes a 20% import duty on telephone sets and other products. The telephone sets include mobile, cellular and satellite phones. Previously, the government removed import duties on telephone sets in a bid to reduce prices to encourage usage. However, the gesture, according to report of the Finance Committee of Parliament, has not yielded the desired results as prices of telephone sets have increased over the period contrary to the government's expectations. Government said reintroduction of the tax will generate revenue and also create an even field for locally manufactured telephone handsets to favourably compete with imported ones. It is estimated that the imposition of ‘the levy on telephone handsets for the remaining half of 2013 will accrue GHC 49.8 million while the tax on plastic products will yield GHC 26 million. Parliament in July also approved the Communication Service Tax (Amendment) bill 2013. The new act is intended to enable government raise additional revenue to support its budget. The FATCA regulations will require local financial institutions to identify, document and report US-owned accounts to the US IRS. They will also be required to apply withholding tax to non-compliant customers and counter-parties. Local financial institutions must become compliant or otherwise be subjected to a 30% withholding tax on certain US-sourced incomes and gross proceeds they receive on US investments. Non-compliance may also make it difficult for local banks to do business with other financial institutions that are FATCA-compliant.