Enhancing tax revenue through the 24-hour economy policy

As former President John Mahama’ proposed 24-hour economy policy gains traction, the potential for economic growth and development is immense. This policy aims to stimulate economic activities round the clock, creating jobs and fostering a vibrant, inclusive economy. However, to sustain this growth, enhancing tax revenue is crucial.

This opinion statement outlines the strategic approaches to maximise tax collection in line with the new economic dynamics.

Modernising tax collection mechanisms

The first step toward enhancing tax revenue in a 24-hour economy is modernising tax collection mechanisms. Digitalisation of tax services, including registration, filing and payments, can significantly reduce the compliance burden and improve collection efficiency. Implementing advanced technologies like blockchain for tax transactions can ensure transparency, reduce fraud and increase compliance.

Broadening the tax base

A 24-hour economy opens up new sectors and activities for taxation. To capitalise on this, the government must broaden the tax base to include emerging sectors, such as digital services, night-time commerce, and informal sectors that thrive in a round-the-clock economy. This involves creating a regulatory framework that encourages formalisation and tax compliance across these new sectors.

Implementing dynamic tax rates

To support businesses transitioning into the 24-hour economy, the government could consider dynamic tax rates. For example, offering lower tax rates during off-peak hours to businesses operating at night can incentivise round-the-clock operations. This not only helps distribute economic activities more evenly throughout the day, but also increases the overall tax revenue by expanding operational hours.

Enhancing tax compliance through incentives

Incentivising tax compliance is key to maximising revenue. Offering tax credits or deductions for businesses that maintain transparent records and comply with tax regulations can encourage adherence. Additionally, incentives for adopting digital payment methods can further enhance compliance and revenue collection, especially in sectors that operate 24/7.

Sector-specific tax strategies

Understanding the unique characteristics of different sectors within the 24-hour economy is essential for effective tax policy. Tailoring tax policies to address the specific needs and challenges of sectors such as hospitality, healthcare, transportation and e-commerce can optimise tax revenue. This may include special tax schemes for small and medium-sized enterprises (SMEs) that play a critical role in the economy.

Public awareness and education

Increasing public awareness about tax obligations and the benefits of the 24-hour economy is fundamental. Engaging in public education campaigns to highlight the role of taxes in supporting public services and infrastructure development can enhance voluntary compliance. Moreover, educating businesses and individuals about the tax benefits and incentives available in a 24-hour economy can promote a culture of compliance.

Conclusion

The transition to a 24-hour economy presents Ghana with a unique opportunity to enhance its tax revenue, which is vital for sustaining economic growth and development. By modernising tax collection, broadening the tax base, implementing dynamic tax rates, incentivising compliance, adopting sector-specific strategies and increasing public awareness, Ghana can maximise the benefits of its 24-hour economy policy. These strategies require a collaborative approach involving stakeholders across the economy to ensure their effective implementation and success.

The writer is the Chief Executive Officer of Keta Investment Promotion Center (KIPC).

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