The COVID-19 pandemic has exposed a long-standing problem in Ghana, which is low revenue mobilization. As a result, tax experts have called for the introduction of an e-tax system to rope in more eligible tax payers.
However, Ghana will need to do a lot to be able to harness the full benefits of the e-tax system. As a result, there is the need to enact an ACT that can back electronic filing or the e-tax system. The high level of illiteracy may also pose a challenge to the success of the e-tax system. And this may require adequate knowledge by the Authority to the populace.
According to Professor Peter Quartey, the digitization of the country’s tax system will ensure that tax revenue leakages are reduced to the barest minimum. The Director of ISSER further indicated that the government is losing a lot of its tax revenues due to inefficiencies in the tax system.
As such he believes that the way to go is for the country to leverage the current growth of digitization to automate the tax system to reduce the human interface. He argued that once the country can reduce the human interface, then it will bring some efficiencies.
Experiences of other countries
Experience from many economies suggests that automation of the tax system may create certain problems which the government must not lose sight of. According to the Organization for Economic Co-operation and Development (OCED), such problems are particularly prevalent in countries with limited ICT experience. There are problems with staff being slow to adopt this new technology.
Meanwhile, evidence also shows that even after many years, the system’s facilities may remain unused. This may be as a result of a lack of management’s agreement before implementation, and lack of involvement of staff in early trial runs. Besides, it may take several years to achieve substantial progress in their use by taxpayers.
Countries such as Malaysia, Singapore, and Thailand have made significant gains in their electronic tax systems. For instance, Malaysia implemented a comprehensive electronic tax system in 2004. The new system allows taxpayers to complete tax forms and provide required payment details online. It also facilitates information updates by taxpayers and other online services that offer assistance to corporate taxpayers. And by 2013, 83% of tax returns filed in Malaysia were done electronically, up from 69% in 2011.
Also, Singapore was one of the first countries in Asia to adopt an electronic system in public administration. It rolled out a system that allows for direct electronic filing through the internet and taxpayers can also pay taxes electronically.
Electronic tax system and tax compliance
Likewise, William Owusu Demitia, a tax consultant and lecturer, has re-emphasized the need for the government to digitize all tax-related activities. According to him, this will help reduce tax avoidance and under declaration of tax.
He argued that the use of electronic payment systems will help the government rake in the needed revenue and ensure tax compliance. He also called for the need to review the country’s tax exemption laws because the country loses a lot of money through tax exemptions.
In an earlier interaction with the Vaultz News, Dr. Adu Owusu Sarkodie, a Lecturer at the University of Ghana, raised the same concerns. He revealed that the tax exemptions last year alone could finance the free SHS.
Furthermore, the Commissioner-General for the GRA, Rev. Ammishaddai Owusu-Amoah has highlighted that his outfit is leveraging digitization to improve revenue collection. He commended the government’s decision to replace the TIN with the Ghana Card. He noted this will increase the number of eligible taxpayers in the country.
Digitized tax system
Recently, a lot of economies are leveraging ICT to improve their tax systems. There is a growing usage of digitization in tax administration. Countries now engage in both electronic filing and payment of taxes. Electronic tax systems present a lot of benefits to both the government and the taxpayers. To the government, it helps to increase revenue, improve efficiency, and enhance the quality of services delivered to taxpayers. Also, it helps in reducing taxpayer compliance burden, reduce administration costs as well as improving enforcement.
Likewise, taxpayers benefit from a simpler and more convenient system, reducing compliance effort and uncertainty. It saves their resources and also reduces the risk of traveling to the tax office.
The government may consider developing a mobile application so that people have quick access to the tax system. Such a system will help people compute their taxes and pay with ease. The benefits are enormous, however, there are some minor issues that the government must address, otherwise it may take a long time to fully reap the benefits.
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