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Ghana losing excessively through tax exemptions – Prof. Bokpin

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Ghana losing excessively through tax exemptions – Prof. Bokpin

Ghana losing excessively through tax exemptions – Prof. Bokpin

Head of Finance at the University of Ghana Business School, Prof. Godfred Bokpin has revealed that tax exemptions introduced by the ruling New Patriotic Party government is causing Ghana more loss than gain since its kick-start; the situation he says is not a good indicator of the growth of the economy.

According to him, these tax exemptions introduced by the Akufo-Addo-led government is rather increasing the country’s debt and not benefiting the public purse.

Addressing stakeholders and the media at IMANI’s public lecture on the theme “Is Ghana’s debt sustainability under serious threat after the IMF program?”, Prof. Bokpin urged government to reconsider as the high volumes of exemptions alone could reduce the country’s borrowing and its subsequent debt servicing.

According to him, if those exemptions are taken off and the Ghana Revenue Authority ensures tax compliance is improved, then the gap will eventually close which will reduce the rate at which we borrow.

“If we’re able to close the gap, there’ll be very little need to borrow then the reason we may borrow may be to do more of the rollover because part of the borrowing we do as a country is for liability management. It’s not everything that goes into project financing, a good size of that into liability management and this is what we have been doing over the years. So the good way to do this is to make sure that we improve on our tax compliance”, he said.

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He said although government introduced those tax exemptions to help Ghanaians, it is rather creating problems because sufficient revenue is not collected thereby increasing our debts.

Prof. Bokpin further revealed that Ghana’s debt shouldn’t in any way be politicised as it has been something of the past but rather political parties must come together in order to find lasting solutions to the problem.

“Sometimes it may cost the government because in an election year they don’t want to offend people, they don’t want to offend businesses, they don’t want to offend citizens when it comes to tax compliance and all of that. And yet expenditure tends to rise in an election year then we go into a deficit. But the deficit has to be financed, deficit is an indication of the borrowing requirement of the government so once we continue to run deficits of the magnitude both in terms of the size, the persistence, then there’s no way we’ll be able to contain our debts”.

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“ It has been a problem over the years so the point we’re trying to make is that, it’s not an NDC not NPP problem, this is Ghana’s problem way back from Nkrumah’s days. And it’s largely because as a country we have not been collecting sufficient tax revenue. And that is work, that’s a lot of work to do and that is what GRA should be doing and that is the target they should be able to have. We have a tax gap of about GHC89bn. We have to be able to close it. The exemptions are just too much and not all of them make sense. But the reality on the ground today is that Ghana is losing excessively through this tax exemptions…We cannot continue this way”, he added.

The country over the years has had some challenges with revenue mobilization in terms of raising the required taxes to match the level of economic activities.

Government last year projected to collect about ¢40 billion cedis but missed out on this target by a little over 5%.

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The Country’s tax-to-GDP ratio is said to be around 12%, even though according to the Finance Minister, government should be doing about 20%.

Government in 2018 budget granted tax exemptions to some manufacturers as well as removing some nuisance taxes on some imported items including spare parts.

There have been calls on government to review the tax exemptions granted to investors and businesses, which experts say is causing it to lose more than $2 billion.

However, Finance Minister Ken Ofori-Atta is confident of meeting the end of year revenue target despite challenges with the first quarter collections.

Government ended the first quarter of this year mobilizing a little over ¢10 billion which is about ¢2 billion short of its ¢12 billion target for the first three months of 2019.

Mr Ofori-Atta insisted that some measures that they are currently implementing together with on-going reforms at the Ghana Revenue Authority (GRA) would help improve the numbers in the coming months.

Source: www.ghanaweb.com

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No more expiry of voice, data bundles – Telcos ordered

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No more expiry of voice, data bundles – Telcos ordered

The Ministry of Communications has directed telcos to roll over all unused data and voice bundles purchased by customers.

This will mean unused data and credit will not expire.

“All unused data and voice bundles purchased by subscribers do not expire and must be rolled over with the next recharge,” the Ministry said in the statement that also directed teclos to cease the instant deduction of the Communications Service Tax (CST).

The Ministry assured that Mobile Network Operators will be subjected to “strict compliance with exiting Quality of Service (QoS) standard to ensure value for the subscribers’ money in accordance with their licence obligations.”

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The directive came in a letter written to the National Communications Authority and was copied the Chief Executive Officers of MTN and Vodafone as well as the two Deputy Ministers of Communication.

The Communications Minister, Ursula Owusu-Ekuful said this was part of measures to”minimise the negative impact of deduction of the CST.”

Currently, only AirtelTigo offers data bundles that do not expire.

Source: citinewsroom.com

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Wa Community Co-operative scoops GHC130K profit in 6 months

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Wa Community Co-operative scoops GHC130K profit in 6 months

The Wa Community Co-operative Credit Union (WACCU) made a net surplus of ¢130,426.12 between June 2018 and December 2018, immediate ex-Board Chairman of the Union, Naa Bawa Seidu, has said.

The amount was more than twice the total budgeted surplus of ¢155,833.92 for the period.

Mr Seidu said this while addressing large crowd of members of WACCU during its 2019 Annual General Meeting (AGM) in Wa on Saturday for the financial year to render accounts to contributors.

The AGM was also to elect new executives including Board members, and Supervisory Committee members to oversee activities of the Union for the next four years.

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Within the period, the Union made a total income of ¢1,883,545.04 which fell short of its target income of ¢2,180,423.59.

But Mr Seidu added that ¢274,510.97 loan loss provision was made to “cater for our deteriorating portfolio quality and for risk growth”.

He assured union members that their leadership would not relent in their efforts to explore available viable means including effectual loan recovery mechanisms and legal processes to recover overdue loans.

The management of WACCU, according to him, was pursuing ten loan cases in court while 26 others had been handed over to Purple Holdings Debt Recovery services to recoup monies due the Union, without resorting to the court.

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“These court actions, though expensive to the Union in money and time, are meant to send a strong signal that the Union will never renege to use the legitimate processes to defend the rights of its members and secure the Union’s resources,” Mr Seidu said.

The newly elected Board Chairman of WACCU, John K. Seidu, pledged that the new board would work to ensure progressive and sustainable growth of the co-operative Union in both membership and financial bases.

He said they would do a feasibility assessment to map out districts and areas to extend their services and ensure its easy access by WACCU members for their mutual benefits.

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As at December 2018, the Wa Community Co-operative Credit Union had 12,208 members with 10,747 fully paid up members, comprising 4,767 females, 5,939 males 1,502 groups and organisations.

Source: ghananewsagency.org

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Africa’s three richest men have more wealth than the poorest 650m people across the continent

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Africa’s three richest men have more wealth than the poorest 650m people across the continent

Three African billionaires today have more wealth than the poorest 50% – or 650 million people across the continent, reveals a new Oxfam report today.

The report, called “A Tale of Two Continents”, is launched as African political and business leaders gather this week for the World Economic Forum Africa meeting in Cape Town, South Africa. It shows how rising and extreme inequality across Africa is undermining efforts to fight poverty.

A Tale of Two Continents reveals that while the richest Africans fortunes are increasing, extreme poverty is rising in the continent. The report also looks at how unsustainable levels of debt and a rigged international tax system are depriving African governments of billions of dollars in lost revenue each year – money that could otherwise be invested in education, healthcare and social protection.

The continent is rapidly becoming the epicentre of global extreme poverty. While the number of people living on less than $1.90 a day has plummeted in Asia, this number is rising in Africa. The World Bank estimates that 87% of the world’s extreme poor will be in Africa by 2030, if current trends continue.

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Winnie Byanyima, Executive Director of Oxfam International, said:

“Africa is ready to rise – but only once it’s leaders have the courage to back a more human economy that works for the many and not a few super-rich men. They can achieve this by investing in inequality-busting, universal and quality public services like health and education and by developing truly progressive tax systems. These are particularly powerful for women and girls living in poverty. They can also back a transformation towards decent and dignified work that protects the rights of workers, especially in the age of the African Free Trade Area and the new digital era.”

The report features a first-ever ranking of African nations on their commitment to tackling inequality. The Commitment to Reducing Inequality Index, developed by Oxfam and Development Finance International, ranks countries on their policies on social spending, tax, and labour rights – three areas the organizations say are critical to reducing inequality. South Africa and Namibia take first and second place respectively, with their strong social spending and a progressive tax system. Nigeria meanwhile has an unenviable distinction of being at the bottom of the Africa ranking, as well as the global ranking for two years running.

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The report shows that:

3 African billionaires now have more wealth than the poorest 50% – or 650 million people across the continent

The most unequal country in the region, Swaziland, is home to one billionaire, Nathan Kirsh, who is estimated to have $4.9bn. If he worked in one of the restaurants that his wholesale company supplies on a worker’s minimum wage, it would take him 5.7 million years to earn his current level of wealth

The combined wealth of the 5 richest Nigerians is more than enough to end poverty in Nigeria. Nigeria’s girl population makes up 60% of the more than 10 million children who do not go to school.

75% of the wealth of African multi-millionaires and billionaires is held offshore, as result the continent is losing $14billion annually in uncollected tax revenue.

Dangerous and unsustainable levels of debt are hurting social spending. In 2018, Angola spent 57% of government revenue on debt repayments while public spending was cut by 19% between 2016 and 2018. Similar trends are present in Ghana, Egypt, Cameroon and Mozambique

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African women and girls are also most likely to be poor. They also stand to lose the most when public services like healthcare and education are underfunded. In Kenya, a boy from a rich family has a one-in-three chance of continuing his studies beyond secondary school. However, a girl from a poor family has a 1-in-250 chance of doing so. Women and girls also bear the brunt of failing healthcare systems, clocking in hours of unpaid care work looking after sick relatives. In Malawi, women spend seven times the amount of time on unpaid care work than men.

Ms Byanyima said:

“African political and business leaders face a clear choice. They can stay on the path of increasingly extreme inequality, where poverty continues to rise while wealth in the hands of a tiny elite and foreign companies’ spirals. Or they can choose another way: towards a more prosperous and equal Africa that invests in and respects the dignity of all its people.”

Source: Oxfam International

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