Dr. Frank Banor, the Head of Research at Danquah Institute, has commended Vice-President Mahamudu Bawumia’s proposed Flat Tax Regime, stating that it is a commendable initiative that has the potential to expand the tax base and include a greater number of taxpayers from the informal sector.
Dr. Mahamudu Bawumia, the presidential candidate for the ruling New Patriotic Party (NPP), has promised to introduce a simplified Flat Tax Regime that will benefit both individuals and businesses.
Mr. Banor shared his belief that implementing a flat tax regime could greatly impact Ghana’s revenue generation efforts during an interview on the Asaase Breakfast Show
Our economy is an informal economy and the idea is to bring so many of the informal sector on board and we know that the sector is dominated by micro small medium enterprises which consist of 85% of the total economy.
He mentioned that the country’s economy is in the hands of Micro Medium Companies and these companies create the most jobs, but only contribute less than 20% to the GDP through taxes. To increase participation, a flat rate system should be implemented to prevent tax evasion.
Amazingly, the highest form of employment is generated by these companies but if you look at their contribution to overall GDP, in terms of taxation, it is less than 20%. So how do we incentivize all these people by coming on board, you can only achieve that by a flat rate system and no one will shy away from paying their tax.
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