Tax Exemptions Bleed Ghana Of GH¢4.66bn

TAX
EXEMPTIONS on import duty, import VAT, import NHIL and domestic VAT over the past
eight years have grown from GH¢391.90 million (0.6% of GDP) in 2010 to GH¢4,662.36
million (1.6% of GDP) in 2018, the Ghana Revenue Authority (GRA) has said.

These
figures do not include exemptions from the payment of corporate and individual
income taxes, concessions on tax rates, petroleum tax reliefs, customs tax
exemptions enjoyed by diplomatic missions and waiver of processing charges at
the ports.

Also, these
do not include a difference of about GH¢1 billion attributable to the FPSO that
was brought into the country in 2017.

The GRA made
this known at a two-day workshop it sponsored for members of the Private
Newspaper Publishers Association of Ghana (PRINPAG) over the weekend in
Koforidua, Eastern Region.

Causes

Daniel Nuer,
an official of GRA, who took participants through the ‘Impact of Tax Waivers on
Ghana’s Economy’, mentioned some factors that contributed to the situation.
Chief among these included the lack of clear exemptions policy, exemption
clauses in donor-funded projects, lack of sunset clauses for exemptions, exemptions
granted government entities and public institutions, exemptions granted without
recourse to the Ministry of Finance, abuse of exemptions, as well as inadequate
reporting on tax expenditure.

Policy Proposals

He said to
help arrest the canker, the GRA had proposed that where the private sector
supplies goods, services or projects to the public sector, such supplies shall
be priced at market prices and those private sector suppliers shall pay all
taxes and import duties chargeable on those transactions.

It said businesses
and investors that sought tax exemptions as a way of improving the viability or
profitability of their businesses should be required to grant the state equity
share equivalent to the tax and duty waivers granted by government.

It also
called for the passage of an Exemptions Act to ensure that proper processes and
procedures were put in place to provide transparency.

Mr. Nuer said the Ministry of Finance had commenced studies into the
impact of all tax expenditure with an eye to redesigning expenditure such that Ghana
got value for money.

Over the past two years, government had taken several steps to reduce the burden of this expenditure by introducing the ‘Pay-and-Come-for-Refund’ policy for six months in 2017, the presentation of an Exemptions Policy to Cabinet and the submission of an Exemptions Bill to Parliament.

BY Samuel Boadi

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