Food vendors at Kumasi's Kejetia Market are appealing to the Ghana Revenue Authority (GRA) to cut their income tax rate. They want the rate reduced from what they claim is 3% to a range of 0.5% to 1% of their annual income. This request stems from significant financial strain experienced by these small business owners.
These vendors are currently facing annual income tax demands between GHS 1,500 and GHS 3,000. Additionally, they must pay various other charges, including business operating permits, sanitation fees, and utility bills. This combination of taxes and levies leaves little profit for reinvestment or business growth for many of the market's food sellers. The Ghana Traditional Caterers Association, Kejetia Branch, highlights the devastating impact these costs have on their livelihoods.
This situation adds to broader concerns about taxing the informal sector in Ghana. Many small businesses, particularly those in food services, struggle with tax compliance due to high rates and complex processes. Ghana's economy relies heavily on informal sector activities. Effective tax collection from this sector is crucial for government revenue. However, the current approach often creates hardship for street vendors and market sellers who operate on thin margins. This challenge reflects a wider debate on balancing revenue mobilization with supporting micro and small enterprises.
Emmanuel Kwarteng, Chairman of the Ghana Traditional Caterers Association, Kejetia Branch, expressed the group’s concerns. He stated that tax payments should match an individual’s capacity. Mr. Kwarteng noted that current GRA rates are too high for the economic realities and operating costs within the market. “We are willing to pay, but the amount being charged is too much,” he said. He added that the current system is “collapsing our businesses instead of helping them grow.”
The push for tax reduction could influence future GRA policies for informal businesses. If unaddressed, these concerns might lead to protests or legal actions from the vendors, as Mr. Kwarteng warned. This situation could also encourage the GRA to explore more accommodating tax models, possibly including reinvestment incentives. Such changes would aim to boost compliance and support the growth of small enterprises in Ghana’s bustling markets. This issue specifically impacts micro-enterprises and their ability to stay afloat.
Mr. Kwarteng also pointed out a significant issue of unfair competition. Itinerant food vendors, who do not have permanent stalls, often operate untaxed. These vendors sell their goods in market corners or hawk them to traders. They directly compete with registered, tax-paying operators, taking away customers without contributing to public finances. This disparity creates an uneven playing field for legitimate businesses.
Leaders of the association have met with GRA officials to negotiate tax reductions. However, these discussions have not yet produced significant results. Mr. Kwarteng is now urging the government to intervene. The goal is to develop a more flexible tax model, possibly one that includes reinvestment incentives for compliant taxpayers. He warned that the association might consider legal action if their concerns regarding informal competition and tax rates are not addressed. This could have implications for market regulation and tax policy enforcement.