Stakeholders dialogue on a Tax Exemption Bill for Ghana

A stakeholder Roundtable Meeting on a Tax Exemptions Bill for Ghana has been held in Accra. The purpose is to advocate for a law that will ultimately regulate tax exemptions that the government often grants to some individuals and institutions to ensure that they are done in a more confined manner.

A bill to this effect which was first laid in the immediate past Parliament could not be worked on to become law due to exigencies of the time, coupled with the perceived lack of commitment on the side of political leadership much to the disappointment of stakeholders and tax activists.

Following its expiration with the life of the previous Parliament, the document has since been reviewed by experts and is awaiting representation and consideration of Parliament through the Ministry of Finance. The recent stakeholder meeting was therefore aimed at briefing participants on the progress to enable them strategize on the way forward.

Gilbert Boyefio is the Coordinator for the “Legislative Advocacy Project.” He explained to journalists on the sidelines of the meeting that “we are doing this because we want the stakeholders’ input on ways to bring the Tax Exemption Bill back to parliament for consideration.”

Last year, three organizations, including the Ghana Anti-Corruption Coalition (GACC), the Tax Justice Coalition (TJC) and the Parliamentary Network Africa (PNAfrica) secured funding from Oxfam to undertake this project dubbed “Legislative Advocacy on Ghana’s Tax Exemptions Bill.”

The objective of the advocacy was to engage parliament through the Finance Committee on the issues of tax exemptions and to ensure that the Exemptions Bill is given urgent consideration; to secure the commitment of the two major political parties in Ghana – the NPP and the NDC ahead of the last general elections, to open up opportunities for further engagement after the elections; and to generate media attention to influence public interest, while igniting conversation on the need to pass the Tax Exemptions Bill.

A representative of the Ghana Revenue Authority (GRA) at the meeting, Adelaide Botchway, who is the Head of Exemptions, threw her intuitions support for the project since according to her tax exemptions are outdoing revenue collections in the country.

She lamented the abuse of the tax exemption regime in Ghana which according to her is making it very difficult for the GRA to meet its annual targets; a situation she admitted can be avoided if there is a tax exemption law in place.

“It appears the exemptions are even outweighing the revenues that we are collecting, and then the abuses are also on a higher side. But the GRA is trying as much as possible to monitor the exemptions and then curb the abuses,” she stated.

As part of the project a Working Group has been formed to work with the consultant to fine tune the reviewed Bill and also engage the Ministry of finance for its presentation to Parliament. Some Members of Parliament (MPs) have also been identified as Tax Exemption champions and have been tasked to ensure that they spearhead the passage of the Bill at all levels when it gets to parliament again.

Background

Ghana provides a number of tax exemptions and incentives to encourage private investment and reduce the tax burden on certain sectors of the economy and the less privileged. These “tax expenditures” become liability on government causing high fiscal cost, even though most of them do not find place in the budget. For example, in 2013, the country lost an estimated 5.2 percent of Gross Domestic Product (GDP) in revenue accumulated from the tax expenditure. While value-added tax (VAT) exemptions and preferential VAT treatment reached 4.2 percent of GDP, customs exemptions hit 0.9 percent.

Despite the purpose of tax exemptions to incentivise certain types of investors, firms and taxpayers, the accumulation in tax expenditure creates distortions in the economy and allows some vested interests to fester, especially when beneficiaries will do whatever in their power to ensure that they enjoy such benefits regardless, whether it has any impact on the economy and society. Even more, the existence of pre-determined tax exemptions in various laws for projects in the future that we cannot determine their financials is of a greater challenge to the country.

Evidence abound that tax exemptions indeed provide respite for investors and citizens who have the potential of creating wealth for the economy and improving quality of living of the ordinary Ghanaian. However, identifiably, this tax expenditure of government does not attract scrutiny as against direct tax expenditures.

This proposed project therefore seeks to engage major stakeholders, including the Ministry of Finance, the GRA, the Finance Committee of Parliament, Civil Society Organizations (CSOs) and the media, to find a common path towards getting the Tax Exemptions Bill back to Parliament and passed.

By Jeorge Wilson Kingson || ghananewsonline.com.gh