A research on tax incentives, has been launched with a call on government and Parliament, to relook at the laws that allow for these taxes to be exempted for multi-national companies at the expense of Ghana’s underfunded basic education sector.
The report launched yesterday in Accra entitled “Tax incentives ….. What tax incentives can do for basic education in Ghana”, said the continuous allocation of huge tax exemptions to companies which are already well established is depriving basic education the needed resources.
It therefore called on the government to ensure that adequate resources and funding are budgeted for the sector so that the infrastructure needs and others are addressed.
It was argued that, if 20 percent of the total annual budget for education is made available to the basic schools alone, a lot can be achieved within a short period of time.
Between 2018 and 2020, Ghana lost a whopping $901.1million as tax incentives through Parliamentary tax waivers alone to corporations and $657million through the Ghana Investment Promotion Centre (GIPC) in 2018.
While government continue to satisfy the aspirations of these multinationals, it expenditure allocation to the education sector increasingly dwindles shifting away from the Global Partnership for Education (GPE) target of 20 percent.
“With an annual average of Ghc 4, 198million funding gap, according to the GPE benchmark, the measures of underperformance and delivery in the education sector, is adequately measured. It showed a fluctuating trend between 13 percent and 16 percent (2016-2021) with its highest peak at 16 percent in 2019”, the report said.
Policy analyst at ISODEC, Bernard Anaba, said although tax incentives are good considering their expected benefits, Ghana has over the period struggled to point out these so called benefits.
According to him, this has persisted, because those who are tasked to negotiate have failed to reach better deals.
He said in most cases, these taxes can be paid by these multinational companies, but they are left off the hook, while the various sectors such as health, education, and other social amenities are unattended to.
Mr Anaba, said there are ways government and parliament, can help curb some of these exemptions, saying there should be a deliberate policy to ensure that taxes for GETfund is not touched, but used for its intended purposes.
“Over the years, I think we have not seen those benefits. We have not seen them; government has not been able to communicate those benefits to us. In fact, government itself laments to the fact that we have not benefited from the incentives that we give. So, government has contemplated the idea that, may be you come and invest then you show us your outputs, what you said you are going to do before you come and claim your incentives. I am not so sure government has been able to implement that policy”.
He went, “So incentives are good in one way or the other if you are able to get the benefits that you want from them. But over the years, we haven’t had the benefits but we also know that our country has needs particularly our basic education. It has been under funded; it has been under funded for years. So, we can make the case that, it’s not everything that we can give out.
We can make the case that, we need to fund our basic education so we are not going to give blanket tax exemptions. There are some we will have to revise. If you look at GETfund for instance, it was a consensus kind of tax, that we all agreed that it is important for our education sector, why should government always give GETfund away as incentives? Government can retain that for the sector irrespective of what it is. It is about negotiation”.
He said there is almost no justifications for these high levels of tax exemptions but government continue to give them.
Mr Anaba said if Ghana does not look for other means to fund basic education, the country will be unable to meet the Sustainable Development Goals (SDGs) especially Goal Four.
Mr Anaba mentioned areas such as the informal sector, illicit financial flows, and the extractive sector that government can look at to fund the education sector. He urged the next Parliament to ensure that the Tax Exemption Bill is passed into law so that it can help regulate the sector so that arbitrary incentives that are doled out are reduced.
Country Director for International Child Development Programme (ICDP), Joyce Larnyo, said a lot remains to be done and so Ghana cannot continue to do the same thing and expect to get a different result.
She said, civil society groups and the media, would have to do more advocacies to bring the attention of government to do the needful by looking at the law that allows these incentives to be given out without recourse to the irreparable damage it is causing the nation. She lamented, if Ghana wants to achieve the SDGs, government would have to stop “being too charitable” to these well to do companies.
Country Director for Actionaid Ghana, Sumaila Abdul-Rahanan, said education is a basic right, but due to the challenges associated with resources; this right is not enjoyed by many children of school going age.
He said the report, follows series of research conducted by Actionaid Ghana, focusing on how to leverage domestic taxation for sustainable financing of the education sector, how progressive taxation cam increase government’s spending on public basic schools and reverse education privatization and what tax incentives can do in the sector. He decried the current expenditure on basic education is woefully inadequate and asked that government shifts attention to the sector to better the situation.
“The cost of education financing is a national issue that requires attention. Government’s expenditure allocation to the education sector falls shy of the Global Partnership for Education (GPE) target of 20%.
Considering the fact that, Ghana lost $901million to tax incentives through parliamentary tax waivers and the fact that 20% of that amount could have provided more school infrastructure to pupils, raises a crucial point that should put things in perspective for all of us”, he said.
He said civil society groups like Actionaid Ghana, the media and others, would continue to do it advocacy work to ensure that government’s attention is redirected to the area. He commended government’s flagship free Senior High School but was quick to to add that a lot remain undone.