Assessing the impact of criminalization of tax breaches

**The Constitution and Tax Laws in Ghana**

In Ghana, taxes are governed by the Revenue Administration Act, 2016 (Act 915). This law defines tax as any duty, levy, charge, or fee imposed by tax law. Taxes are created through positive legislation.

Article 174 of the Ghana Constitution states that no taxation can occur without an Act of Parliament. If an Act allows someone to waive or change a tax, Parliament must approve this action first. Therefore, taxes must be imposed according to positive law.

**Taxes and Revenue Mobilization**

The main purpose of taxation is to generate government revenue. Tax proceeds help fund essential services for citizens. Justice Oliver Wendel Holmes stated that “Taxes are what you pay for a civilized society.” Everyone living in a civilized world should contribute by paying taxes.

In Ghana, tax revenue makes up about 70% of government revenue. It also accounts for nearly 14% of the gross domestic product (GDP). This highlights the importance of ensuring tax payment and encouraging voluntary compliance.

Tax offences can be classified as criminal or administrative based on governing statutes. A crime involves actions that violate laws explicitly prohibited. The Revenue Administration Act categorizes certain offences under administration and others as criminal.

**Criminalizing Tax Breaches**

The discussion around criminalizing tax breaches in Ghana has gained attention recently. Some individuals have received custodial sentences for violating section 80 of the Revenue Administration Act 2016 (Act 915). Supporters argue that criminalizing these breaches serves several purposes.

First, it promotes deterrence. Establishing standards helps discourage violations through fear of consequences. Taxes benefit all citizens; thus, punishments should warn potential offenders.

Second, it emphasizes revenue generation for development. Taxation is crucial for Ghana's survival and growth. Deliberately infringing on tax laws harms the state’s ability to collect necessary funds.

Third, it fosters equity and fairness in society. A fair system requires everyone to comply with laws equally. Criminalizing breaches ensures those who follow the rules are not disadvantaged by non-compliant individuals.

Fourth, it supports economic stability. Compliance with tax laws is vital for maintaining economic health. Criminalizing infractions can prevent reckless behavior that threatens stability.

Lastly, it provides necessary investigative powers to uncover truths about violations. This knowledge aids international collaboration when needed and shows commitment to protecting public funds.

**Using Administrative Penalties**

Despite these arguments, some believe criminalizing all tax breaches may be excessive. Tax education in Ghana needs improvement; many taxpayers lack awareness of their responsibilities.

Efforts are underway by the GRA to educate taxpayers better but more work is needed at basic education levels. A "catch them young" approach could instill values early on and reduce future offences.

Minor infractions might not require criminalization; civil penalties could suffice instead. Over-criminalization may create unnecessary hardships for individuals or businesses.

Additionally, harsh penalties could deter entrepreneurship and investment—key drivers of economic growth in Ghana. Recent cases show how punitive measures might push business owners away from compliance due to fear of severe consequences.

Critics also argue that courts may become overwhelmed with cases related to minor breaches leading to delays in justice delivery.

**Conclusion and Way Forward**

There are strong opinions both supporting and opposing the criminalization of tax breaches in Ghana. Handling tax crimes solely through administrative means may not achieve full voluntary compliance among taxpayers.

A balance is needed between enforcing laws while allowing businesses to thrive economically. The Revenue Administration Act aims to strike this balance by categorizing some offences as crimes while treating others administratively.

Sections 78-83 address serious offences with potential fines or imprisonment while sections 70-76 handle less severe issues administratively.

Ghana's future depends on its ability to mobilize revenue effectively from taxes while ensuring fair treatment across all sectors.