The Big Bracket Outcome: Widening The Tax Bracket and Why It’s Important

Just like the salary you earn at the end of the month is spent on your necessities, taxes are a country’s main source of revenue to develop, provide infrastructure and work towards poverty alleviation. This in turn could become an investment into tourism, and other ventures of generating more revenue. One way we can help the government speed up this process is by widening the tax bracket.

The Tax Bracket, explained simply, is the number of people in the formal sector whose salaries are taxable. At present, there are 2 types of main taxes:

  1. Income Tax Goods
  2. Services Tax (GST)

The more commonly known, but less popular Income Tax

This is payable only by people in the formal sector whose salaries fall within the countries taxable bracket threshold limit. Therefore, people earning salaries below a certain base line aren’t liable to pay tax and are therefore Income Tax exempt. However, higher-salary earners are taxed a greater percentage than others.

The GST, however, is a consumption tax

It is levied on goods and services and which is payable by each and everyone, poor and rich depending on the amount of purchase of goods and/or services.

The widening of the tax bracket would mean that more and more people would pay taxes that are due legitimately. We can do this in the following ways

  1. Adding more people to the tax net by, for example, reducing the income tax exemption to GH¢1,000 from GH¢2,500. This way, more people become liable to pay Income Tax on their earnings now, therefore covering a larger group of people under the tax net.
  2. Availing more goods or services to be taxed. Currently, there are certain goods which are exempt of tax on the market. For example, certain goods from the Agricultural and Fishing sector are exempt of tax. If, however, goods and products in these sectors were taxed, more revenue would be generated every time a purchase  is made.

In addition, as entrepreneurs and owners of SMEs and startups, one way we can pitch in toward widening the tax bracket would be ensuring that our businesses are registered for tax collection. When this is done, the country not only stands to fetch maximum revenue for the government for its expenditure, but the taxpayers also get to enjoy a considerably lower rate of tax even on higher revenue due to widening of tax bracket.

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