The Minister for Finance, Ken Ofori-Atta, in July last year, confirmed that the country lost about GH¢27 billion to tax exemptions granted some businesses between 2008 and 2020. This amounts to about GH¢2.2 billion surrendered in tax waivers each year for the 12-year period.
The Minister said in Parliament that since 2008, it was only in 2020 that the lost revenue declined to about GH¢1.8 billion.
Ken Ofori-Atta gave the confirmation during the second reading of the Tax Exemptions Bill, 2020.
The bill, which was considered under a certificate of urgency by the Finance Committee, sets clear eligibility criteria for tax exemptions, and provide for the monitoring, evaluation, and enforcement of exemptions.
It also provides a regulatory regime for monitoring tax exemptions to ensure that exemptions granted are used for the intended purposes, as well as curtail the abuse of the existing exemption regime.
Then Ranking Member on the Finance Committee, Dr. Cassiel Ato Forson, while supporting the motion for the second reading, expressed worry over the fact that the country’s tax exemption regime had been “abused; was too generous, and had never been regulated over the years.”
As a result, he said the country had lost so much revenue, and that the time had come for Parliament to regulate the extent to which it could grant tax exemptions.
Addressing journalists yesterday, the new Minority Leader called for a halt on tax exemptions in the country, which, he thinks, have become one too many.
His argument was that, in the current situation the economy of the country finds itself every cedi is needed, thus the government cannot continue to grant tax exemptions.
We cannot agree less with the economist cum legislator. We are extremely concerned with the phenomenon giving that most, if not all, taxes exempted may not even impact the economy positively. We are not saying this in a vacuum, because there has been an argument that if the country had not had that amount lost to tax exemptions, maybe the economy could have a breathing space.
We are at a point where the government is literally squeezing water from stones. Many do not want to hear about the ongoing debt exchange programme. Meanwhile, we are losing money through tax exemptions and other loopholes.
During the debate on the bill, the Majority Leader, Osei-Kyei-Mensah-Bonsu, said if the GH¢27 billion the country granted in taxes forfeitures was dollar-rated from 2008, the day of the discussion, in July 2022, Ghana would have lost not less than GH¢50 billion.
He went ahead to say that if we had even a third of that amount, we would not be talking about re-engagement with the International Monetary Fund (IMF).
In as much as we agree with that, it is about time Ghana turned away from this behavior, especially when the economy is on life support and we also need to put our house in order.
We are not oblivious of the fact that many of these businesses that benefit from tax exemptions do not give back to society.
If we are even lucky enough to have the registered as a Ghanaian company, the real owners may be foreigners and would repatriate the returns, even though they were granted tax exemptions.
The executive and legislator, we think should be firm this time and suspend tax exemptions as suggested by the minority leader.
We have learnt that the tax exemption law is expected to meaningfully lower cost of tax exemptions. Some had even projected about GH¢500 million for the 2022 financial year. If that amount is anything to do the mathematics with, it translates into huge sums of money for the next decade, which would go a long way to support the economy.
