Preso-Elect,
I’m very happy to write you my second letter. I’m fine. I hope you are fine too. I forgot to volunteer as one of your Mystery Shoppers in my first letter. I’ll bear my own costs. I don’t intend to do it entirely free though; please honour me with one of the left over JAK medals at the next awards ceremony, and I mean one of the £30k medals. We ask for the star so I may inherit the clouds, no? So I ask for the best medal but any of the (slightly lesser) ones will do.
On medals for yourself, I give you the words of Cato the Elder: “After I’m dead, I’d rather have men ask why I have no monument than why I have one”. ‘Nuff said!
But let me move on. I realize that this business of advising you is a growth industry with very low barriers to entry. You’ve only seen a trickle so far, expect a deluge. Much of the advice will recommend spending on education, health, infrastructure, etc. Today, I intend to comment briefly on taxes.
“Widening the tax net” is a perennial preoccupation of our revenue agencies, in word but not in deed. The excuse is that our poor address system makes it difficult to find economic agents with chargeable income. This must be very familiar to you as an ex-commish. It is strange, though, that when these good taxmen need to find these phantom entities for some personal end, then, it’s duck soup, simple! Ever heard of a taxman who couldn’t find a good mechanic for his car when he needs one? How does he do it? He asks those who know where to find the mechanic.
The reality is that our formal and informal economies do not exist separately, mutually exclusively. They transact business together daily and the formal economy keeps records. If we are willing to use what we have to get what we want, then we must use information available in the formal sector to track tax evaders hiding in the informal labyrinth.
I know I’ve already asked for a medal as reward for my earlier ideas but here I go again. I’ve filed my tax returns religiously for the past 10yrs. If you offer me a 5% rebate on my tax and guarantee that the cheque will be in the post, I’ll give you up-to-date details of the top 10 suppliers to my household. Fair deal? If you require the same of other households and businesses (no rebate for them), you’ll have all the info you need to track down tax evaders. The only problem then becomes your ability to process the info and track them down.
Your government will also be in the money if you insist that importers show tax clearance certificates every time. Currently, they can get away with payment of 1% of the CIF value, presumably as a deposit on their taxes. They then vanish into the informal warren till the next consignment arrives.
Prof, you know, much better than most that we must begin to wean ourselves off foreign aid. Ghanaians must begin to pay our way through life, to assess our choices in terms of affordability. The nation can afford more when it collects all that it’s owed, no?
Yours sincerely,
Yaw
