Connect with us

Business

Ghana losing excessively through tax exemptions – Prof. Bokpin

Published

on

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.

Read Also  Three persons injured, 20 arrested after clash at Keri Yam Festival

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”.

Read Also  Time to invest in Africa is now – Dr Bawumia challenges Indian investors

“ 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.

Read Also  There was no consensus on referendum at meeting with Akufo-Addo

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

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

Business

The 9 Financial blunders Ghanaian Young Men Commit

Published

on

When a young graduate finally lands a job after university, it is such a big deal, even extended family members call to congratulate them.

Many of these men will go on to retire to a life they didn’t really want. Why?

It emanates from a series of blunders:

The Borrowed wedding:
A wedding is such a big deal in our society. The only problem is that most at times, the young man who is yet to himself financially will have to bear all the costs alone. Some can’t afford all the expenses and may be tempted to borrow some money to top up.

Join our WhatsApp Group 2 to get notified when new Job Vacancies in Ghana are posted. Click Here to Join Our Jobs in Ghana Website WhatsApp Group 2

The wedding is done, people come and eat and drink and leave them to service their debt. The wedding gifts normally won’t bail you out.

2. The Borrowed House

After marriage, the young man often realizes his “chamber and hall” apartment is not big enough for his bride, he needs to get a bigger space, once again he borrows some money (say from a credit union)to pay at least two years to rent advance, compounding his debt.

3. The Borrowed Car

Then comes the pregnancy and kids, the young man realizes that a car is an absolute necessity to make life easier for the family. So when he is approached by those beautiful bank ladies for a cool loan deal, he jumps at this and buys that Toyota Corolla. Repayment of the car loan alone can take up to 40% of his net monthly salary, whilst servicing the rent and wedding debts on the side.

Read Also  Sunyani Municipal Assembly endorses President's nominee

4. The Family Savior Wahala

The young man soon discovers that the reason for the rejoicing of the family members. It is payback time. From siblings, parents, aunties, cousins, in-laws, including the distant relative who helped you cross the village river when you were five years everyone digs in to get their share of the young man’s fortune It is normally small tokens, but when aggregated is a big deal ( about 30% of annual salary)

5. The Seed Eaters Wahala

These are family, colleagues, and friends who borrow money from the young man with no intention to pay. They come up with all those emergency stories with the promise to pay the next month. They never pay. It normally ends in tears and ruined relationships.

6. The “Big Boy” Wahala

The young man would have hopefully made strides in his career at this stage of his life, which comes with more salary, but then the extra disposable income doesn’t go into savings or investments. Seeing themselves as “big boys “ they quickly elevate their spending, renting bigger houses with spare rooms hardly utilized, get bigger cars, family holidays etc.

Read Also  CFTA Secretariat: AU Delegation assesses Ghana’s bid

7. The Two Masters Wahala

At this point in the man’s life, he would have secured a piece of land and started building his dream house normally with a bank loan whilst paying those huge sums of rent to his landlord on a yearly basis. Being indebted at the same time to the bank and your landlord is like serving two masters. In my view, it is better to serve one master( the bank)

8. The Strangling Wahala

The kids are growing, and so are their fees and other upkeep. Some may be ready to go to college, but Daddy didn’t have an educational investment. He needs to dig deep to sort out the kids’ education. There is still the ever-mounting family financial pressures. At this point in the man’s life, he earns a lot but has equally neck level expenses to match it

Join our WhatsApp Group to get notified when latest news in Ghana AND JOBS IN GHANA are posted. Click Here to Join EnewsGhana Website WhatsApp Group

9. Where did it All Go Stage?

At this point, the man is in his mid-fifties, May still have college responsibilities to take care of. He may be putting finishing touches to his dream house( which took decades because of its gargantuan nature. It will later dawn on him that the kids will soon leave home and the six-bedroom dream house is too big for just the wife and himself

Read Also  Ghanaian MD of Ecobank Kenya retires after 29 years of service

The bells of pension begin to sound louder as the days go by, only to realize that he had worked most of his years:

a. For the banks servicing loans, he could have avoided with a lot more prudence,

b. For landlords, paying unreasonable rent advance year after year for too long a time.

c. Family and friends in his bid to becoming a one-stop solution for all their needs

He has worked for everyone except himself, without any financial plan set out at the beginning of his career, he will be at the mercy of his employer and loved ones at the end of his career.

Many men could enjoy a fulfilled retirement, if they had actively planned, instead they prefer to flow with the tide, unfortunately, some get sunk by the tides of life.

Get a financial plan the moment you start working, allow the power of compound interest to work hard for you, and make sure you enjoy retirement.

Remember that Joseph in the Bible had only 7 years to prepare for another 7 years of drought.

Ask yourself? After working for at least 30 years, If you are to live for another 30 years after your retirement, will you live comfortably financially or be at the mercy of others?

Author: Roland Ofori, Marketing Professional

Continue Reading

Business

”Government Will Start Arresting Mallams And Lotto Operators On TV” – Information Minister Hints

Published

on

The Minister of Information, Kojo Oppong Nkrumah has hinted on the government’s intention to clamp down on Mallams and lotto operators on TV soon.

The minister also hinted that the government has written to the Bank of Ghana and the National Media Commission to clear out all these scammers and fraudsters who successfully swayed viewers into losing their hard-earned money with their fraudulent schemes.

In an interview on Accra-based Peace FM, the Information Minister noted his outfit as well the government is aware of the worrying trend that’s why they are taking measures to have these charlatans flushed out.

He said a letter has been written to the Bank of Ghana to clamp down on these individuals chanting money because it’s the sole preserve of the Bank of Ghana to produce notes of money in the country.

Read Also  ‘Ghana needs 25-year national development policy’ to propel the growth of the country

Source: ENewsGhana.com

Continue Reading

Trending