Some Civil Society Organisations (CSOs) have called for better transparency in how government grants tax exemptions to companies and individuals doing business in the country.
Tax exemption allows for government and parliament to give companies some waivers on taxes so there is a general benefit to the economy. But the CSOs say lack of transparency is derailing that.
“Tax exemptions make us lose taxes. And so, we should be able to properly quantify what is being lost. And match it appropriately with what the benefits will be. When we are losing revenue, we need to have a way to get it back,” Daniel Oberko who is Tax and Trade Coordinator at the Public Services International said in an interview.
Statistics indicate that the state loses an amount equivalent to 12.5% of all taxes collected annually, to tax exemptions given to companies by government and parliament.
Government has laid before parliament a Tax Exemption Bill 2021 which is expected to harmonise the provision of tax exemptions.
An earlier attempt to get it approved in 2020 failed after the life span of the previous parliament expired before approval processes were concluded.
The Tax Justice Coalition (TJC), the Parliamentary Network Africa (PN Africa), the Ghana Anti-Corruption Coalition Ghana (GACC), and the Public Services International with support from Oxfam have been working as the Legislative Advocacy Working Group to push for the approval of the bill.
They say it will help make a real difference in ensuring transparency.
“We need a law that can appropriately guide tax exemptions. Tax exemptions, sometimes, people take advantage of it and make us lose more. So, we need to block all of that. As a nation, we need a lot of money to be able to do good schools, build hospitals, among others for the benefit of Ghanaians,” Mr. Oberko said.
“What we are calling for is transparency and accountability. All the benefits of tax exemptions are potentials and assumptions. The thing that will make a difference is transparency,” he added.
According to the Institute of Economic Affairs, IEA, Ghana loses over GH¢5 billion every year through tax exemptions. The institute in May called on government to pass the tax exemption bill immediately to plug a big hole in the tax system.
Director of Research at IEA, Dr. John Kwakye said “the political will to pass the bill seems to be lacking. We urge Parliament to pass the bill with urgency, to plug a big hole in the tax system.”
Minister of State at the Finance Ministry, Charles Adu-Boahen said at the recent Stanbic Bank-Graphic Business Breakfast Meeting, the bill is long overdue.
He said when passed into law, the bill would help government streamline tax exemptions for businesses and foreign investors in the country.