{"id":2837,"date":"2014-02-28T07:41:03","date_gmt":"2014-02-28T07:41:03","guid":{"rendered":"http:\/\/4cd.e16.myftpupload.com\/?p=2837"},"modified":"2014-02-28T08:39:32","modified_gmt":"2014-02-28T08:39:32","slug":"ghana-loses-1-2bn-tax-incentives-to-foreign-companies","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2014\/02\/ghana-loses-1-2bn-tax-incentives-to-foreign-companies\/","title":{"rendered":"Ghana loses $1.2bn tax incentives to foreign companies"},"content":{"rendered":"
\"Haruna<\/a>
Haruna Iddrisu<\/figcaption><\/figure>\n

Ghana loses approximately $1.2 billion in tax incentives offered foreign companies every year which would otherwise have been channelled into segments of the economy crying for real resuscitation, a study carried by ActionAid Ghana has established.<\/p>\n

Consequently, the study has advised\u00a0the enactment of necessary legislation so that all the huge sums or money that go to cushion foreign\u00a0companies\u00a0operating in the country,\u00a0find their way into thenational kitty.<\/p>\n

ActionAid Ghana,\u00a0a non\u00ad-governmental organization,\u00a0in\u00a0collaboration with ISODEC centre, launchedthe report\u00a0sensitizing\u00a0the media to tax justice,\u00a0tax incentives\u00a0and the \u201cTax Power\u00a0Campaign,\u201d\u00a0all in a bid to encourage\u00a0Ghanaians\u00a0to demand proper\u00a0accountability\u00a0in taxes paid by\u00a0companies,\u00a0and also to pay the right taxes required of them.<\/p>\n

The report\u00a0reiterates that Ghana\u00a0loses huge sums\u00a0of money in taxes\u00a0that could have\u00a0been used to alleviate poverty, to the tune of $1.2 billion (GHc 2.4 million) annually as a result of\u00a0tax\u00a0incentives to foreign and big\u00a0companies\u00a0operating in the country.<\/p>\n

This figure was\u00a0arrived at, having taken into consideration, the GDP base between 2012 and 2014\u00a0as well as the annual tax- expenditure.<\/p>\n

The report also says that analysis of the percentage component of total revenues given as incentives in different categories, shows that in 2012, 41% of trade tax revenues were lost through taxexemptions compared to 28% of direct tax and VAT revenues.<\/p>\n

The\u00a02013\u00a0Budget and Economic\u00a0Policy\u00a0Statement\u00a0of\u00a0the government\u00a0estimates\u00a0that Ghana\u2019s\u00a0tax expenditure\u00a0was about\u00a03.28\u00a0per\u00a0cent of GDP.<\/p>\n

In\u00a0the\u00a02014 Budget, the figure has been readjusted to 2.1 per cent of GDP. It is therefore estimated that Ghana lost $1.2 billion as a result of tax incentives equivalent to the total health sector budget for the year<\/p>\n

The estimations also show that in the year 2012 alone, direct tax and VAT exemptions amounted toUS$876\u00a0million. This is also about\u00a067\u00a0per cent of all exemptions with trade- related exemptions making up 33 per cent of all tax exemptions in 2012.<\/p>\n

Presenting part of the report findings, Mr Bernard Anaba, a policy analyst with ISODEC, says the research shows that there has been a decline in trade revenues from 2006 to date due to tax exemptions such as import tax exemptions and tax completions among ECOWAS countries.<\/p>\n

However, he says that all this notwithstanding, Ghana\u2019s tax rate remains the lowest in the sub- region.<\/p>\n

He adds that when Ghana gives tax incentives, \u201cwe are not able to close all the loopholes or gaps and we lose billions of dollars.\u201d<\/p>\n

ActionAid recommends that the tax exemption gap be closed, otherwise government will be forced to impose high taxes on its people, especially the poor ones. The impact of income tax on the poor, therefore, must be a source of worry for all.<\/p>\n

ActionAid representative, Mr Anaba, said those incentives are \u201charmful\u201d because the way they are granted makes some sectors of the economy suffer.<\/p>\n

He said Foreign Direct\u00a0Investment\u00a0(FDI) inflow inched up in Ghana due to oil\u00a0exploitation from\u00a02011,and over 79-per cent of FDIs are located in Accra and Tema. Mr Anaba called for urgent negotiations and discussion in order to provide solutions.<\/p>\n

Mr Emmanuel Budu-Addo, Head of Finance at ActionAid, says that taxation can be traced to the Egyptian taxing on households and added that even American taxation dates back to colonization.<\/p>\n

He said taxation has four fundamental purposes referred to as the\u00a04\u00a0Rs \u2014 Revenue which stands for the income generated by the government to enable it to undertake important projects for the citizenry.<\/p>\n

Representation is\u00a0the power given to the citizens through the payment of taxes to challenge the government as to how the state is governed in that by paying taxes they acquire the right to demand accountability from the government.<\/p>\n

Redistribution stands for resources. By generating income from taxes, government is\u00a0able to distribute resources including water, electricity and other necessities to reach every citizen. In this case, all areas of the economy will be catered for and citizens\u2019 satisfaction will be enhanced.<\/p>\n

And, finally, re-pricing, which would encourage or discourage the acquisition and use of certain less important products such as tobacco and alcohol.<\/p>\n

He said this would\u00a0help the\u00a0government to address\u00a0the Balance\u00a0of Payment (BoP)\u00a0difficulties.<\/p>\n

Mr Budu-Addo\u00a0said that equity is\u00a0a cardinal\u00a0principle of taxation, which requires the tax burden to be proportional and based on benefits received from society. He stressed that \u201cthe equity principle is not about how much you pay but the effect\u00a0on\u00a0you when you pay.\u201d<\/p>\n

He explained that tax dodging is a grey line between tax evasion and avoidance, and decried the rate at which such practices have denied the government much needed revenue to carry out development projects.<\/p>\n

He said such practices also breach the principle of equity, in which usually the poor man is always the one who suffers while the big companies rather benefit.<\/p>\n

Source: The General Telegraph<\/p>\n","protected":false},"excerpt":{"rendered":"

Ghana loses approximately $1.2 billion in tax incentives offered foreign companies every year which would otherwise have been channelled into segments of the economy crying for real resuscitation, a study carried by ActionAid Ghana has established. Consequently, the study has advised\u00a0the enactment of necessary legislation so that all the huge sums or money that go […]<\/p>\n","protected":false},"author":14,"featured_media":2838,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[21,4],"yoast_head":"\nGhana loses $1.2bn tax incentives to foreign companies - Citi 97.3 FM - Relevant Radio. 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