Question Tag: Voluntary tax compliance

Student’s Address
Accra
12 January 2021

The Commissioner-General
Ghana Revenue Authority
Accra

Dear Sir,

Subject: Interventions to Enhance Voluntary Tax Compliance

I write to highlight key reasons why taxpayers find it challenging to comply with tax laws and offer suggestions for interventions that could improve voluntary tax compliance.

Challenges Faced by Taxpayers:

1. Complexity of Tax Laws: Many taxpayers find the tax laws difficult to understand, which often leads to mistakes in filing tax returns or incorrect tax calculations.
2. High Compliance Costs: Engaging tax professionals to assist in tax filings can be expensive, particularly for small and medium-sized enterprises (SMEs), which may not have the resources to bear these costs.
3. Cumbersome Administrative Procedures: Lengthy and bureaucratic processes for filing tax returns, seeking tax refunds, or obtaining tax clearance certificates discourage compliance.
4. Lack of Tax Education: Many taxpayers are not aware of the latest changes in tax laws or the proper procedures for filing returns, leading to non-compliance.
5. Perception of Unfairness: Some taxpayers feel that the tax system is inequitable, particularly with high rates of tax penalties and interest on late payments, creating resentment and discouraging voluntary compliance.
6. Fear of Penalties: Taxpayers may be reluctant to engage with the tax system due to the fear of penalties for past mistakes or omissions.
7. Inadequate Support from GRA: Limited access to tax education and support services from the Ghana Revenue Authority (GRA) results in taxpayers struggling to comply with their obligations.

Proposed Interventions:

1. Simplification of Tax Laws: The GRA should work on simplifying tax laws and providing easy-to-understand guidelines and explanations. This would reduce errors and misunderstandings, particularly for SMEs.
2. Digitalization of Tax Processes: Streamlining tax filing and payment processes through an accessible and user-friendly online system would save taxpayers time and resources, encouraging higher compliance.
3. Regular Tax Education Campaigns: Continuous education campaigns, seminars, and workshops tailored to the needs of different taxpayer categories would help increase awareness of tax obligations and changes in tax laws.
4. Amnesty Programs: Offering tax amnesties periodically can encourage taxpayers to come forward and regularize their tax affairs without the fear of severe penalties for previous non-compliance.
5. Taxpayer Support Services: Establishing dedicated taxpayer support centers and helplines to assist individuals and businesses with their tax filings can improve confidence in the system and foster compliance.
6. Incentives for Early Payment: Offering incentives such as discounts or lower rates for early tax payments could motivate taxpayers to meet their tax obligations in a timely manner.
7. Reduction of Penalties: Adjusting the penalty regime to make it less punitive and more supportive of taxpayers who make genuine errors would improve relations between GRA and taxpayers.

I hope these interventions will be helpful in promoting voluntary tax compliance across the country.

Yours faithfully,
Coke Fanta