President of the Ghana Union of Traders Association (GUTA), Dr Joseph Obeng, has expressed the need for government and the Ghana Revenue Authority (GRA) to avoid discriminatory taxing of businesses and ensure uniformity.

According to him, the disparity in the market when it comes to taxation is “very bad” and the Union on several platforms has appealed to government for redress. He revealed that there have been discussions on the matter with VAT administrators, who only respond from the stance of they being implementers, despite recognising the lapses in the tax administration.

“… You have a system that runs three concurrently in the same market. We have a standard rate where one pays 90.25 and we have flat rate of 4% and we have those who do not pay the VAT at all and they are all legitimate. What system is this? A system should not be discriminatory. A tax system should be uniform. A tax system should not be designed to cripple other companies [and] destroy companies; and we’ve written on this to say that what you’ve done with the VAT, it makes compliance very difficult.”
Dr Joseph Obeng

Dr Obeng indicated that the current tax system does not ensure fairness and equity. Owing to this, he explained that for businesses registered and complying with tax imposition, they are “being victimised” and that has occasioned the reaction from Kumasi traders by closing down their shops.

“It should not be said that at this time that our businesses are collapsing, the exchange rate is depleting all our capital, the interest rate is so high that we are thinking about how to salvage our businesses, that you have sent an official to come and sit at our shops. Nobody is going to allow that. We are not going to be sitting down and be bullied by anybody.”
Dr Joseph Obeng

Challenges of taxation of businesses

On his part, the Executive Secretary of Adum Business Centre, Charles Appiah Kubi, revealed that traders in Kumasi who have closed shops to protest rising taxes have “no challenge with paying taxes to government”. He stated that traders are well aware of the need for government to tax them as the country can only survive through taxation and revenue mobilisation, a move “businesses are very dedicated to doing”.

However, Mr Kubi highlighted that the uniqueness of the market space in Ghana means that government cannot impose taxes that do not conform to the dynamics within the market. This, he noted, are the issues that traders have raised.

“We are not evading taxes and we have not said we will not pay taxes. What we have raised over the periods is the structure of the VAT system.”
Charles Appiah Kubi

Additionally, Mr Kubi indicated that traders have “high non-tax of VAT compliance” as most businesses have not registered for VAT. By this, he explained that when government introduces VAT into the system, it is rife to find only a handful of businesses registered on VAT.

“They have to add either the standard rate which is 6% levy on it or the VAT rate which is 4%. Their prices go so high that customers do not want to buy from them. They rather want to buy from those who have not registered for VAT and their prices are cheaper.”
Charles Appiah Kubi

Unfair taxation, Mr Kubi emphasized, deprives the right people who want to do business the apt way to support the government from doing so. With this, he indicated that government’s tax system is not sustainable.

“Can we look at a policy that will cut across every facet of our markets so that every person within the market space becomes compliant; so that you as government can mobilize more revenue as you want it? This has never yielded any results.”
Charles Appiah Kubi

The Executive Secretary of Adum Business Centre stated that some traders who have registered for VAT have now become the target of government and because they need to stay in active business, they are compelled not to charge the VAT in order to appeal to customers.