Economist, Dr. Lord Mensah has called for a count by count assessment of all sectors of the economy before undertaking any tax reform following the rebasing of the economy.
According to him, such a move will make up for the shortfall in revenue generation.
The Ghana Statistical Service recently announced that the economy had expanded by 32.4 % following the change in base year from 2006 to 2013.
The expansion in the economy has resulted in a drop in the revenue to GDP as well as a drop in the tax to GDP.
In an interview with Citi Business News, Dr. Lord Mensah was of the view that the assets that were added to the new base year resulting in its expansion may not necessarily be taxable and therefore government must review them critically before increasing or introducing new taxes.
“Tax to GDP will obviously drop following the rebasing and that means that possibly, the assets that have been added in the recent rebasing resulting in the expansion of the economy may not necessarily be assets that contribute to tax,” he stated.
“So government should do count by count assessment to look at the additions that were made in the rebasing and see what brought about the expansion in the rebasing”. So that if there is a shortage in revenue from that side that is generating taxes, that obviously is what the government is supposed to do to ensure that they generate more revenue from that side”.
Sectoral Distribution of Economy
Based on the sectors of the economy the agricultural sector grew by 6.1 percent, compared to the 8.4 percent recorded prior to the rebasing.
Industry grew by 15.7 percent compared to the 16.7 percent recorded earlier and the services sector saw a drop from 4.3 percent to 3.3 percent after the rebasing.
By: Anita Arthur/citibusinessnews.com/Ghana
The post Avoid hasty tax policies with rebased economy – Economist appeared first on Citi Business News.