Ghana’s neglected property tax system is gaining traction as the perfect replacement for the obnoxious E-levy and COVID-19 tax.
Some economists and financial analysts see the potential of property tax as unmatched which can help to revolutionize and transform the country’s domestic revenue mobilization.
This clarion call comes on the heels of President Mahama’s promise to abolish some controversial taxes deemed nuisance and obnoxious introduced by the immediate past government. These taxes include E-levy, Betting Tax, Covid-19 and Emissions levies.
The commitment by President Mahama to scrap these taxes in his first 90 days in office has generated a heated debate. While some analysts reject this decision on grounds of the revenue gap it could create, others wholeheartedly embrace the call giving varied reasons.
These taxes, especially E-levy and Covid-19 tax are estimated to cost the country about GH¢5.27 billion annually representing about 3% of the total domestic revenue.
But proponents for the scrapping of these taxes, although admit the potential revenue loss believe there is a tax handle that has been neglected for years that can compensate for the loss.
Professor of Finance at the Andrews University in the US, Prof. Williams Peprah is the latest to join the clarion call for a relook at the property tax system as a perfect replacement for the taxes marked for abolishment.
He argues that there are numerous studies that confirm that property taxes alone can provide about 2% to 3% of the tax to GDP compensating for the revenue shortfall
However, the challenge, he says is the political commitment to undertake such a reform as property taxes hugely impact High Net Worth Individuals (HNWI) and politically exposed persons (PEPs) hence the failure of successive governments to fully implement.
“There’s one line item that the previous government wanted to make sure that we get revenue from which they failed which is a property tax. If the E-levy and COVID taxes are going to be abolished, the alternative for government is to make sure that the property tax regime is enhanced,” he said in an interview monitored by The High Street Journal.
He added, “There are a lot of studies that have now been done that say that that’s one alone can give us almost about a 2 to 3% of our GDP, revenue to GDP. We will be able to make up for any shortfall that may arise going forward.”
Earlier economist at the University of Ghana Business School, Prof. Patrick Asuming had made similar calls for a relook at the property tax system as a huge potential for increasing government revenue.
He also argues that the property tax is a progressive one that can offer relief to low-income earners while high-income earners pay more resulting in equity.
Financial Analyst, Dr. Richmond Atuahene also supports this call insisting property tax is one of the effective means the government can diversify its revenue streams and improve the overall revenue mobilization. He further states that property tax can also bolster the relatively low tax-to-GDP ratio and address the persistent fiscal challenges.
With the challenges associated with property taxes, these experts are keenly watching our the government will navigate its way to court public support for these proposed reforms that will compensate for the revenue shortfall from scrapping E-levy, and Betting Tax among others.
