2023 Budget: Tax expert calls for introduction of 40% additional tax band, road tax
Fiscal policy specialist with Oxfam, Dr Alex Ampaabeng, has called for the introduction of two new taxes in the 2023 budget statement set to be presented to Parliament next month.
The two new taxes he is calling on the Finance Minister to introduce are the road tax and the 40% additional tax band for persons with income above GHS 48,000 ($4,000).
According to Dr Ampaabeng, the introduction of the two new taxes is critical to government raising more revenue to finance development amid constrained tax revenue mobilisation efforts and prevailing adverse macroeconomic conditions.
Touching on the 40% additional tax band, Dr Ampaabeng noted the tax should be applicable to the additional income of persons that earn GHS 48,000 ($4,000) and above.
This is aside the 30% maximum tax rate charged on the income of higher earning individuals.
For the poor, Dr Ampaabeng is advocating that, the GHS 365 tax free income of low-income earners be adjusted upwards to GHS 700. Implying that, persons earning GHS 700 and below, should not be charged the marginal 5% tax rate.
Presently, Ghanaians earning GHS 400 are charged a marginal tax rate of 5% on their income, for those earning GHS 660, they are charged a marginal tax of 10%.
Ghanaians earning GHS 840 are charged marginal tax rate of 17.5%.
Regarding the road tax, Dr Ampaabeng avers the proposed tax handle should replace all road-related levies in the country.
“Government should scrap tollbooth tax and all other road-related levies and replace it with the road tax. The road tax unlike the tollbooth levy is not for crossing the tollbooth, but rather for using the road.
“The road tax has to be charged on an annual basis where road users pay once every year, so for instance a person goes to the DVLA to get his or her license and then pays the road tax,” he told norvanreports on the sidelines of the CSO Budget Forum engagement with the media.
With more than 2 million cars in the country, Dr Ampaabeng notes that the proposed tax handle has the potential of raising a lot of revenue for government.
Dr Ampaabeng tells norvanreports that the aforementioned taxes were proposed to both the Finance Ministry and the IMF for consideration in the country’s upcoming 2023 budget.
