On the back of announced revenue deficit for the first half of 2019, an economist has dispelled the notion that the answer to low revenue mobilisation lies with making the Informal Sector pay more taxes.
According to Dr Ebo Duncan, the Informal Sector is already on the tax radar of the Ghana Revenue Authority.
Therefore it cannot bring additional money to the Consolidated Fund, he said on JoyNews’ Pm Express Thursday.
At the 2020 budget presentation, the Finance Minister, Ken Ofori-Atta, informed Parliament that the provisional fiscal data for the first half of 2019 shows that revenue mobilisation fell short of the target.
Consequently, the fiscal deficit for the period widened from a programmed target of 2.9 per cent of GDP to 3.3 per cent.
He added that “total Revenue and Grants for the first half of the year amounted to GH¢22.8 billion compared with a programmed target of GH¢27.0 billion, resulting in a shortfall of 15.5 per cent. This, however, represents a nominal increase of 7.8 per cent over the corresponding period in 2018.”
Dr Duncan said even though a lot needs to be done to increase revenue, these should not include asking the Informal Sector to pay more. The sector is already burdened, he added.
According to him, apart from contributing to Value Added Tax, the Informal Sector business person is taxed daily and periodically by relevant state agencies, citing taxes by local authorities at the markets and lorry stations.
In addition, Dr Duncan said the Informal Sector may appear not to be paying income tax but they do, only that most of them fall below the legally mandated threshold of ¢ 288 income level and cannot be taxed on their earnings.
We should not be deceived by the large number that occupies the informal space, he cautioned, although 85% of the working population fall into this bracket, they only contribute to 30%, of GDP.
This includes 20% of Agricultural workers who are exempted from tax payment.