Ghana loses $2.1 billion dollars to tax evasion annually

Accra, Aug. 31, GNA
– Ghana loses nearly $2.1 billion dollars to tax evasion and incentives
annually, reveals a study carried out by the Integrated Social Development
Centre (ISODEC), a civil society organisation.

According to the
study, which was conducted on behalf of the National Coordinating Council of
the Public Services International (PSI), there was the loss of revenue in
excess of $4.9 billion from 1970 and 2008, as a result of the tax evasions by
corporate groups, individuals, multinationals and other organisations operating
in the country.

Mr Bernard Anaba, a
Policy Analyst at ISODEC, who revealed these in his presentation at a day’s
conference on “Tax Justice and Public Sector Restructuring” in Accra, said such
entities either dodge or evade taxes and under declare their incomes or engaged
in illicit trade, which affected the tax net, leading to the running down of
the national revenue.

He said taxes play
a major role, especially in ensuring the redistribution of wealth in every
country from rich individuals, funding essential public services and tackling
poverty.

However these
multinationals, for instance, evade taxes by setting up subsidiaries in
developing countries, and operate in cross-border investment stocks through,
which they route their profits through the borders through illicit means.

He explained that
these were known as “tax heavens”, or “secrecy jurisdictions”, which enable
individuals or companies to escape or undermine the laws, rules and regulations
of other jurisdictions elsewhere, using secrecy as a prime tool, and further
riding on the support of some lawyers and accountants, find innovative ways to
cut their tax bills. 

He said these
companies usually ship their profits outside the country quickly and pretend
not have made any profit at the end of the year. 

Mr Anaba said the
study also chanced on an Action Aid report on investment in Ghana, which
revealed that the country loses $1.2 billion annually due to tax incentives,
and in addition, 41 per cent of trade tax and 28 per cent of direct tax and
Valued Added Tax (VAT) revenues were through exemptions in 2012.

The impact, he said
includes revenue shortfalls resulting in deficits, which impede the ability of
government to execute its fiscal policy, control excessive borrowing from both
domestic and foreign sources, avoid relying on foreign aid, and ensuring the
timely release of earmarked revenues for development activities. 

According to him
experiences from elsewhere had shown that multinationals, which avoided taxes,
were usually slapped with heavy fines, to serve as a deterrent to others, and
said Ghana could learn such experiences and lessons, and emulate.

The conference
which was organised by the PSI in conjunction with its affiliate Unions
including the Ghana Registered Nurses’ and Midwives’ Association, was to create
awareness among workers in order to engage them in campaign and alliance
building, to promote quality public services through a tax system that is fair,
and also for them to be in a position to propose alternatives to public sector
restructuring. 

Mr Kwaku
Asante-Krobea, who doubles as the President of the Ghana Registered Nurses’ and
Midwives’ Association and Chairman of the National Coordinating Council of the
PSI, called on the various unions in the public sector to form task forces to
mount pressure on the government and the Parliamentary Sub-Committees to enact
laws that would enhance and widen the tax net, and block all the current
loopholes that exist within the tax system.

According to him
tax justice as a principle is about how taxes are raised and are spent,
therefore equality in its collection must be a critical national concern for
all public sector workers and society as a whole.

However
multinational companies happen to be the worse culprits who dodge millions of
taxes every year, acting as giants corporate parasites on the countries they
operate in, sucking profits out and leaving the rest of society to pay the
price.

He also noted that
most citizens fall outside the tax net thereby leaving the few formal sector
workers to shoulder the entire tax burden to raise revenue for development.

The tax system
should contribute to delivering and expanding quality public services like
healthcare, education, utilities, roads, sanitation, physical and social
infrastructure, redistributing income and wealth to tackle poverty and
inequality.

Taxation, he said
could do a huge number of positive things in any society, therefore it is vital
that trade unions are able to articulate an alternative model of a tax system
which was progressive.

Mr Asante-Krobea
said discussions at the conference would help in establishing a unified tax
justice system for the country.

GNA

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