Professor Peter Quartey has backed the government’s decision to tax the gaming sector. According to him, a lot of people are now moving from lotteries to the online gaming activities. This, he noted, makes the sector very juicy for government to tax.
The Economist and Director of the Institute of Statistical, Social and Economic Research (ISSER) told The Vaultz News that government’s decision is justified. He noted that the National Lotteries Authority (NLA) generates a lot of revenue for the government. However, the influx of online gaming, he believes, may affect revenue generation by the NLA.
“So, what you do is that, when people earn money [from online gaming], you tax the earnings. Any person that earns income through a genuine means must be taxed. I have no problem with taxing that sector at all”.
It is estimated that Ghana loses over GH¢300 million annually in revenue due to leakages in the gaming sector. Gaming has become a major income earner all across the globe and a significant source of government revenue. As such, the government has identified gaming as one of the main sources of revenue mobilization for the country. As a result, the government is set to formulate a comprehensive policy to improve revenue mobilization from this sector.
Despite its potency of raising substantial revenues for the state, the ISSER Boss noted that it may have some repercussions on the country. According to him, the gaming sector is already encouraging a lot of the youth in the country to go into betting instead of looking for gainful employment. He also cited the likelihood of an increase in fraud and other similar social vices.
Current proposed taxes
Regarding the government’s proposed taxes, Prof. Quartey opined that government has no choice than to impose the taxes. According to him, if Ghana was an advanced economy, it would have had enough resources to fall on without imposing taxes.
He indicated that he expects the Ghana Revenue Authority to be more innovative in its approach to raise more revenues for the country. He also calls for automation of the processes of revenue collection by the GRA.
“Revenue collection mechanisms should be automated; there should be less human interface”.
COVID-19 Funds and COVID-19 Levies
A section of Ghanaians suggest that the government should have appealed for resources to re-fund the COVID-19 Funds. They believe this is a better way to raise revenues rather than imposing taxes. However, Prof. Quartey disagrees. He noted that taxation will be a more effective approach to mobilize revenues within the shortest period to aid the recovery process.
“Taxing citizens will respond appropriately over the needed resources”.
He then recalled that the COVID-19 Funds called for assistance because the government was running out of resources.
Thus, the finance ministry has indicated that the COVID-19 National Trust Fund used about 79% of its resources in 2020. Similarly, the COVID-19 Private Sector Fund utilized approximately 91 percent of resources it had mobilized from its Fund.
According to him, it is however not appropriate to rely on only one or a few sources of raising revenues. He cited taxation, donations and grants, cut back on investments as some of the means available for the government to explore. But, he believes the best option now is to look inwards, thus, raise money domestically. He noted that external borrowing is not appropriate due its high interest components. He also revealed that the government is spending close to 49.5% of projected revenues on interest payments alone.
“So, borrowing is not the best option now. Raising more tax revenues will have been good. And also, making our tax systems more efficient than we are seeing now. There are so many revenue leakages in the system”.
Other revenue sources
Professor Quartey, therefore, called on the government to explore other non-tax revenue avenues so as to reduce the burden on individuals and companies. He indicated that there are a lot of revenues that the government can generate from property taxes. This is an area he thinks the government has not really explored.
Also, he noted that the government should try and make some of the state owned enterprises more efficient as they may also raise some revenues for the government. The ISSER Boss also called for the taxing of ideal lands, as a way of mobilizing revenues for the state.