The Vice President of the Republic of Ghana, His Excellency Alhaji Dr. Mahamudu Bawumia, has stated that majority of property owners in the country do not pay taxes on them.
According to him, taxes are paid on only 9 percent of properties in Ghana and an average of GH¢ 38.2 million is collected annually as property tax.
In a detailed speech on economic transformation through digitization, Dr. Bawumia disclosed that over the last two years, Government has been working on providing a solution to this problem through digitization.
An effective property tax regime, according to the Vice President, requires that “we are able to Identify all properties; Assess the value of all properties; Identify and maintain a property owner’s database; Send Bill to Owners; [and] Enforce payment of taxes”.
National Common Platform for Property Tax Administration for Ghana
Dr. Bawumia revealed that the government has developed a platform to enhance the collection and administration of property tax in the country.
The Vice President acknowledged the hard work of the Ministers for Local Government and Rural Development as well as Lands and Natural Resources with support from the Minister for Finance, that led to the development of a National Common Platform for Property Tax Administration for Ghana which will operate across all MMDAs.
According to the Vice President, the Platform is integrated with the NIA database, Digital Property Address System and the Ghana.Gov. Platform. Providing details on the Platform, Dr. Bawumia indicated that it will help generate and monitor the distribution of bills, both digitally and via hand delivery.
The National Common Platform for Property Tax Administration will also provide Real Time Returns information with regards to revenue performance and data collection returns. Other functions of the platform include the provision of limited real time access and visibility to performance data (valuation rolls updates, billing, collections etc) to MMDAs as well as providing Real Time Information to the general public or tax Payers.
“Any homeowner can pay property taxes using their mobile phone. The Platform is ready and is expected to be implemented by the Ministry of Local Government in 2022”.
Dr. Bawumia
Digitization and domestic revenue mobilization
Dr. Bawumia reiterated the fact that Ghana has a major challenge in the area of domestic revenue mobilization.
“The tax/GDP ratio is 14.3% compared to 27% for South Africa and 34% for the advanced (OECD) countries. Most adults are outside the tax net and compliance is very low. At the beginning of 2017, only 4% of the adult population of Ghana had Tax Identification Numbers (TIN). Indeed, a recent study by the World Bank (November 2020) estimates inter alia that potential tax revenues from sole proprietors, who usually operate in the informal sector, amounted to 12.6 percent of GDP”.
Dr. Bawumia
The Vice President asserted that “broadening the tax net is therefore imperative”. In this regard, a number of digital initiatives have been implemented to broaden the tax base and create a vehicle for enhanced domestic revenue mobilization. One of them is the designation of the Ghanacard number as the TIN number, which he stated, led to an increase in the percentage of adults with TIN numbers from 4% to 86%.
Other initiatives to broaden the tax base
Dr. Bawumia mentioned the Digital Address System, the move towards electronic payments, as well as the formalization of the informal sector through digitalization as some of the ways of expanding the tax base.
He also spoke at length about the Digitization of the tax filing process to make it easier and less cumbersome to file taxes. The tax filing Mobile App has been designed specifically to make the filing of taxes very simple, he stated.
On the use of the filling Moblie App, the Vice President explained that once you sign on, you will be asked to answer a number of simple questions after which you can hit the send button and your tax liability or refund will be calculated.
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