Nii Moi Thompson, a former Director General of the National Development Planning Commission, has called plans to improve taxation of the informal sector “misguided.”
Mr. Thompson stated that, in the aftermath of the e-levy and other policies aimed at broadening the tax net, “unfortunately for us in Ghana, we are actually moving in the opposite direction.”
“We don’t think taxing them [the informal sector] will transform the [economy], no, it won’t work at all,” he said on Citi TV’s The Point of View.
“The majority of them are in the poor bracket, with something like 74% of them in what we call vulnerable employment, so even if we registered everyone, we wouldn’t get that much in taxation.”
He instead suggested that the government focus on “improving efficiency, raising productivity and raising incomes” in the informal sector to ensure a much higher tax base.
In 2014, the Ghana Statistical Service estimated that 86.1 percent of all employment was found in the informal economy; 90.9 percent of women and 81 percent of men.
“You can expand the tax net all you want, but what you may get is like Keta schoolboys; a lot of small fishes without the big ones. The focus should be on the tax base, the source of the income.”
“You can register all the kayaye in Ghana and tax them for the next 20 years. You still won’t get a fraction from what you get from just plugging holes at Tema,” he noted further, as an example.
