Amnesty 1 won’t solve the problems with tax collection, according to economists

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“Economists Warn: Tax Collection Challenges Extend Beyond Amnesty Solutions”

John Gatsi, a Professor of Economics at the University of Cape Coast (UCC), expresses skepticism regarding Vice President Dr. Mahamudu Bawumia’s proposed tax amnesty. He doubts that this initiative will effectively improve tax compliance or tackle the underlying issues associated with tax collection.

Dr. Bawumia, the presidential candidate for the New Patriotic Party, has pledged to introduce a tax amnesty and implement a simplified flat tax system that is citizen- and business-friendly if elected. His proposal, outlined during a speech at the University of Professional Studies, Accra, involves implementing a flat tax based on income percentages for individuals and Small and Medium Enterprises (SMEs), which comprise 98% of businesses in Ghana.

The proposed system also includes exemption thresholds to protect low-income individuals and promises to simplify corporate tax and VAT regulations. However, Professor Gatsi argues that these measures fail to address the root challenge of tax collection in the country.

He identifies the primary issue as a lack of citizen commitment to voluntary tax compliance due to perceived inadequate public service benefits. Speaking to Umaru Sanda Amadu on Eyewitness News, Professor Gatsi suggests that Ghana should prioritize enhancing public services to incentivize tax payment.

He emphasizes that even if a tax amnesty were granted, it would not induce significant change because it does not address the core issue of taxpayer commitment. According to Professor Gatsi, Ghana’s citizens are reluctant to pay taxes voluntarily due to the substandard quality of public infrastructure and services, such as public transport and access to essential amenities.

Addressing these fundamental issues, he believes, is crucial for fostering a culture of tax compliance and ensuring that taxpayers perceive tangible benefits from their contributions.

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