Sharing the tax burden
Sunyani Market women advocate for better transparency in assessment methods

All governments, the world over, require tax revenue. Governments therefore institute policies and laws to regulate and administer, the collection and use of tax revenue at all levels of their societies. In Ghana, the tax laws enjoin taxpayers to file their returns at the end of the year of assessment. It also provides for reasons such as illiteracy or inability to keep proper records, an oral declaration of income by the taxpayer, and subsequent assessment of the tax liability by the Net Worth Method, a method that involves considerable discretion on the part of tax officials.

Paying tax is a civic responsibility. However, in Ghana, it is estimated that the informal sector, which includes self-employed persons like market women, tailors, and farmers, and engages about 80% of the working population, for a myriad of reasons, contribute only about 5% of total tax revenue. To address this incredible anomaly, tax administrators have in recent times engaged in very aggressive tax collection exercises, which include visits to market centres on market days to undertake field collection exercises.

In these tax collection exercises at the markets, officials use a number of indicators that include, the quantity of fish displayed for sale by a trader, the number of barrels of palm oil a trader is bringing to the market, and the loads of plantain being directed to the market by a trader, among others to make highly discretional estimates of tax liabilities and exact payments on the spot. This method more often than not generates disagreements and confrontation between tax officials and taxpayers at various markets, including the Sunyani market.

Sunyani is the regional capital of the Brong Ahafo region in Ghana, the region often referred to as the "Bread Basket" of Ghana. Its market comes alive on the market days of Wednesday through Friday. Traders from far and near, rural and urban areas visit the market on these days to join in the business transactions, just as the tax officials also get on site to perform their duties. The very low contribution of the informal sector to tax revenue notwithstanding, Sunyani market women were convinced that the manner in which tax was being exacted at the market made their tax burden disproportionate, unreasonable, and nebulous. It also had the potential of adversely affecting business activity in the market altogether.

The market women with BUSAC support engaged the services of a consultant to draw attention to the need for transparency in the application of the net worth rule for on the spot taxation in the market. They held a number of constructive discussions with the Internal Revenue Services (IRS) on this subject, and through these interactions, considerable harmony has replaced the acrimonious relationships and sporadic altercations and confrontations that were the norm between Sunyani market women and tax officials.

There is now an arrangement between them, that allows the IRS to regularly visit the market to educate, as well as exact taxes. The tax assessment criteria are better appreciated through these interactions, and this has helped improve tax compliance and payments by the market women. As explained by the President of the market women association, ‘we are now able to estimate our tax liability on our own, and pay up voluntarily without any quarrels. We are happy with our new relationship with our tax officers, and our grateful to BUSAC Fund for making this transformation possible.’