Ten (10) possible ways by which the Ghana tax system should be improved?
The complicated nature of our Ghanaian tax system is the collection of all the taxes in operation in the economy of Ghana and laws to regulate the operations more effective and efficient. The individual income tax imposes costs not only on taxpayers, who expend time and money preparing and filing their returns, but also on the Internal Revenue Service, and other tax collection agencies like VAT, and CEPS in Ghana. Various ways to improve Ghana tax system is as follows;
· Educating the masses and citizen: In educating the citizens and the masses to know the reason for tax in Ghana that enable high patronage and that will increase the tax system in Ghana, which will be use to provision of infrastructures, roads, building school, security in the country and other medical provision to increase the health standard of Ghanaians that enhance self development and national development.
· Establishment of National Database: the use of this informative know as database, will help in having individual information to know who is a Ghanaian or resident in Ghana with creating these type of database system will show the number of income taxes earners and knowing their total income to charge their tax levy on. Too, knowing the number of business in existence and for Effective Corporation to regulate tax in Ghana.
· In-service training to workers: the various tax collection agencies give in service by initiating new programmes and modern instrument to regulate the high performance in Ghana by sowing them new technique for tax payers to safeguard their tax payment which will make tax system to be more effective in Ghana.
· Impose laws to regulate tax system: the government of Ghana should impose laws to regulate the tax system in Ghana, so that the powers within the law to collect all delinquent taxes including prosecution and jail time for tax evasion that will put fears and panic that enable accountability in the running the tax system in Ghana to provide good government decision in the tax administration.
· Computerization of tax system: in keeping data and other statistical records in the electronic form which will provide accuracy in delivering information and can be kept for a long time, if needed for further action and reliable for management to take decision and other future demand in improve the tax system in Ghana for other developmental project which tax is used for.
· Mechanism to deal with import tax and export tax: some of the indirect taxes in Ghana are import tax and export tax which is impose on commodities like goods and services that is been bought and consume, by implementing policies to regulate the tax system in Ghana to boost the economy of Ghana and economy indicators like favorable balance of payment and trade which will influence investor to invest and taxes will impose on them to increase our tax level in Ghana.
· Coordinate tax benefits for dependent care: Taxpayers may reduce their costs for dependent care through the child and dependent care credit and through flexible spending accounts set up by their employers. They may, however, use only one of the two options for a specific expense, which can make it difficult both to plan how to finance child care and to complete tax returns. Coordinating the two benefits or combining them into a single benefit would address both problems.
- Simplify or eliminate the taxation of Social Security benefits: Whether and how much of a person’s Social Security benefits are subject to income tax depends on the person’s income: single beneficiaries with adjusted income below $25,000 ($32,000 for couples) pay no tax on their benefits; those with higher incomes must include up to 85 percent of their Social Security payments in taxable income. Determining the amount to include requires completing an eighteen-line worksheet that draws on information from other parts of the tax return. Making a fixed fraction of benefits taxable (possibly zero) for all beneficiaries would eliminate that worksheet and make tax filing easier for them.
- Simplify the taxation of capital gains: The income tax currently imposes at least eight different effective tax rates on capital gains, depending on the taxpayer’s regular tax rate, how long an asset was owned, the type of asset, and whether the taxpayer owes AMT. The IRS provides three different worksheets, one with 37 lines, to help taxpayers calculate their tax on capital gains. Allowing a percentage exclusion for long-term gains (and perhaps other kinds of gain) and applying regular tax rates to the rest would sharply reduce the complexity of returns while maintaining different treatment for different kinds of gain.
- Combine tax incentives to save for retirement: Workers can currently save for retirement in various ways that receive different tax treatment; these include deductible, nondeductible, and Roth Individual Retirement Accounts, regular and Roth 401(k)s and similar plans, and traditional employment-based pension plans. Each type of saving has its own eligibility requirements, income limits, and tax benefits, which complicates the task of choosing among them. Combining existing options into fewer alternatives and setting the same income limits for all would simplify workers’ choices and reduce the cost of administering so many programs.