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Use innovative approaches to integrate
informal sector into economy - Baah-Wiredu
Accra, Jan. 10, GNA - Finance Minister Kwadwo Baah-Wiredu on
Wednesday emphasized that innovative and prudent approaches
were required by governments to ensure smooth integration of
informal enterprises into the formal economy.
Speaking on Ghana's experience and efforts in ensuring tax
compliance in the informal sector at the opening session of
a two-day conference on Enterprise Formalisation in Africa,
Mr Baah-Wiredu said although the informal enterprises employ
about 80 per cent, they contributed only about five per cent
to the total tax revenue annually.
He said, apart from their large size and nature, most of
such enterprises operated without license or permit,
therefore, making tax payer identification a big challenge
to tax administration.
"The problem is compounded by inadequate system of tracing
and holding persons to account for incomes earned from
economic ventures in all parts of the country."
For instance, Mr Baah-Wiredu said out of the 27,000
registered businesses on the books of the Registrar General
Department, just about 16,000 of them were captured by the
Internal Revenue Service for tax purposes.
It is in this direction that government in its drive to
enhance generation and mobilization of domestic revenue had
instituted various tax schemes to address the problem of low
tax revenue from the informal enterprises.
Some of these measures included, the Vehicle Income Tax
system designed for commercial transport operators, the Tax
Stamp Regime for small scale businesses, tax amnesty to
informal enterprises in terms of outstanding taxes to
encourage them to effect payment of current tax obligation
and negotiating with informal enterprises for flexible
payment of taxes.
Mr Baah-Wiredu said the government had backed these schemes
with the necessary legislation and administrative machinery
to ensure success.
Mr Alan Kyeremanten, Minister of Trade, Industry, Private
Sector Development and PSI said to be effective, the actors
in the informal sector should be encouraged to participate
in decision making and the formulation
of policies and regulation, which they would be motivated to
comply with.
The conference, being attended by policy makers and
development practitioners from African countries will share
information and ideas about the forms of intervention work
needed to encourage African entrepreneurs' participation in
government-sponsored institutions.
GNA
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