General News of Sunday, 19 February 2017
The Akufo-Addo government has been urged not to shy away from imposing a tax to fund free education following a raging debate over the funding source for the 2016 campaign promise.
A pro-social intervention civil society group, ISODEC made this recommendation, urging government to follow after Uganda’s model which “relied heavily on taxation” to make its free senior high school education happen.
The debate over funding was triggered by Senior Minister Osafo Maafo after he said government was likely going to use a fund reserved for Ghana’s unborn generation, the Heritage Fund.
The fund is a 9% contribution from Ghana’s petroleum revenue receipts and can only be touched after at least 15 years as stipulated in the Petroleum Revenue Management Act.
The largely social-media driven debate appeared to suggest the move to use the Heritage Fund is imprudent while other sections quipped that the future is now hence the fund should be used.
Finance minister Ken Ofori-Atta has moved to calm waters stating the $286m Heritage Fund will not be touched to foot a GHC3.6billion social intervention bill. Government has also pointed out that the Senior Minister was only floating a suggestion.
But discussing the controversy on Joy News’ political analysis program, Newsfile Saturday, Executive Director of Integrated Social Development Centre (ISODEC) Dr. Steve Manteaw has suggested to government that a fresh tax for “good and feasible’ policy of free education is not out of place.
He said weaker economies like Ugandan had a $12billion economy when it rolled out free SHS 10 years ago. Ghana’s economy is $37billion and therefore cannot use funding challenges as an excuse.
“What stops us from taxing our $37billion to make this happen?” he said.
He said government needs to re-align spending priorities to find the money for the intervention.
Analysing missed opportunities to make and save money, Dr. Steve Manteaw said government failed to tax corporate profits after Sabre Oil and Gas Holdings Limited (Sabre) sold its 2.7% stake in the Jubilee Oil Fields. This was after the EO Group (Ghana) in 2011 also sold its 1.75 percent shares at a reported $305m.
According to Manteaw, Ghana government could have made about $70million in revenue through taxes on the profits of these sales but failed to do so because of loopholes in the tax laws.
“There was inconsistency in the petroleum tax law and the general tax law,” he said. The Finance minister later moved to seal the loophole “after the horse had bolted”, he expressed disappointment.
Yet at the time when corporate bodies got away with huge monies, the government was looking to raise revenue by taxing cutlasses and condoms, Dr. Manteaw expressed disbelief.
He said ISODEC’s work has helped the Ghana Revenue Authority to recover $12million from the SINOPEC gas project. There is also ISODEC-authored research which shows Ghana can make more from its exports because they are undervalued, he said.
He was particularly disappointed that after mining gold for 100 years, Ghana has nothing concrete to show for it.
“[Ghana] ended up as a Highly Indebted Poor Country (HIPC), a sad commentary of how we mismanaged that resource. Rationally in life, you do not squander your assets. You invest your assets and live off the dividends from that assets…but what have we done with gold sector?”
“All revenue accrued in a year [from gold], we channel into next year’s budget and spend everything mostly on recurrent expenditure”, he said. The Executive Director suggested that oil revenue is going the way of gold judging from how government is spending the money.
Turning his attention to the Heritage Fund, Dr. Manteaw was clear that the Fund ought not to be considered for the financing of a political promise.
He said by keeping the oil money for the so-called “future generation” the framers of the law were thinking about that “generation that will not be luckily to met our oil endowment” when the resource has been depleted.
“It is not today’s youth or those who will be born next year….we are looking far far into the future”, he stressed.