Pass the Exemptions Bill Now
The Tax Justice Coalition Ghana wishes to express its concerns about the slow pace in the passage of the Tax Exemptions Bill which has been pending since 2019. The Coalition notices with concern that the government has continuously focused its revenue mobilization efforts on consumer-based indirect taxes while providing attractive incentives for corporate bodies, especially without regard to the negative impact of such incentives on the national revenue mobilization efforts. The Coalition is equally concerned that the over-reliance on indirect consumer-based taxes imposes a huge burden on the citizenry and makes life unbearable for them.
There is no gainsaying that the income tax exemptions, tax holidays, rebates, and concessions as well as import duty exemptions, value-added tax reliefs, and excise taxes all deprive the country of the much-needed revenues for development. The undue delay of the Tax Exemptions Bill has continued to cost the country huge revenue losses and deprives the country of regular and certain flows of money from multilateral companies that do not actually need the tax incentives granted them just as these exemptions do not also bring the country the desired benefits of foreign direct investments, jobs, and technological transfers.
The numerous tax exemptions granted to individuals and multinationals in 2020 alone amounted to GHS 1.71 billion as compared to GHS 2.43 billion, GHS 2.25 billion, and GH 3.8 billion in 2019, 2018, and 2017 respectively. The country also granted tax incentives totalling GHS 4.56 billion and GHS 9.47 billion between 2016 and 2020. The situation is worsened by the country’s weak capacity in monitoring the operations of the natural resource sectors as well as the free zones companies, subjecting them to abuse and further losses of revenues
Moreover, these exemptions bring unjust competition among businesses operating in the same industry where private projects are granted an exemption to improve their profitability and viability while depriving other players in the same industry of such concessions. Furthermore, tax exemptions granted on items that are available locally create unjust competition for local manufacturers of those goods.
It is in view of these challenges that the Tax justice Coalition Ghana once again calls on the government and Ghana’s Parliament to act speedily on the Tax Exemptions Bill to curb the huge losses of tax revenues through the generous tax exemptions which are not even yielding the desired outcomes. In addition, the Coalition calls on the government and its relevant agencies to continuously review and monitor the operations of our natural (extractive) resource sector and free zones enclave to prevent and or curb any abuses by those in the sector with regard to revenue mobilization.
This call is particularly more urgent now as we turn to the International Monetary Fund for a bailout. However, the Coalition calls on the government not to yield to any prescriptions on the granting of more tax incentives to multinational companies and/or further focus on indirect taxes. This is inimical to the welfare of the country and its deprived citizens. The IMF conditionalities could stop the free SHS program which operates on blank cheques with no policy framework. The country needs to address the challenge of the political economy to have a strong policy arrangement for recovering money lost as a result of tax evasion and stop nepotism by cracking down on tax evaders and granting irrational exemptions. We make these calls in the national interest and hope that the President and his government will consider them in that light and act them.
The Tax Justice Coalition is an umbrella body of CSOs and individuals advocating for fairer and more just tax systems and policies as well as more efficient and effective utilization of tax revenues in Ghana. For further clarifications and questions, please, contact the Acting Coordinator, Nii Addo on telephone number 0260704666 or e-mail firstname.lastname@example.org and email@example.com.
Click to view: