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Revenue target in 2018 budget is ambitious – PWC

Price Water House Coopers, PWC has described revenue target set out in the 2018 budget as ambitious, warning that government may struggle in getting the entire amount projected.

The accounting and tax advisory firm’s warning was contained in its analysis of the 2018 budget released today.

Government is planning to raise some GH¢51 billion from revenue and grants for 2018. But PWC in its 2018 budget analysis was worried that government may struggle to get the entire amount unless it intensifies tax compliance measures for next year.

Price Water House Coopers also noted that even though it welcomes the tax breaks on the income of private universities, it is worried about how the taxpayer will be required to provide the evidence of profit plough back, “Will mere non-distribution of prior period profits be enough or will there be a need to demonstrate how much expenditure has been incurred in “maintaining” and “expanding” the educational facilities?.

Also on the introduction of Alternative Dispute Resolution in resolving tax disputes, the accounting firm said it is of the view that the mechanisms should be implemented in a way, with minimal bottlenecks.

According to data from the finance ministry, the government has been able to collect about 28 billion Ghana cedi in revenue ending September, against a revised end of year target of GH¢41 billion.

PWC in its analysis attributed the shortfalls in revenue to delays in implementation of tax compliance and administrative measures and slow down GDP growth in the non-oil sectors of the economy.

On the fiscal side, PWC noted that consolidation efforts will need to be balanced with growth should continue to be anchored in wide-ranging structural fiscal reforms, so that consolidation gains can be sustained over the medium term.

“These include measures to broaden the tax base and enhance tax compliance and public financial management, especially considering the large unpaid arrears accumulated in 2016 and the significant revenue shortfall of 10% in 2017.”

The 2018 Budget Statement did not introduce any new taxes aimed at widening the revenue net, however, the government is still optimistic that in 2018 it can achieve over 25% increase in tax revenue over the total projected tax revenue for the year 2017, PWC added.

Read PWC’s 2018 budget highlights here

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