Stakeholders are pushing for changes to the Exemptions Bill, 2019 currently in Parliament before passage by the next House.
The Bill, laid in Parliament in 2019 has been with the finance committee since its referral by Speaker Prof. Aaron Mike Oquaye.
Given the stages the bill has to go through before passage, the only logical conclusion is that the bill will have to return to the next Parliament.
Checks at the finance committee reveal no meeting has been held on the bill since it was referred.
The Exemptions Bill, 2019 according to the memorandum accompanying it is to rationalize the current exemptions regime on taxes, levies, fees and charges by varying, where necessary, and consolidating existing statutory provisions an tax and other exemptions and to provide for the administration of exemptions.
Government had stated passage of the Exemptions Bill last year would have saved the state GH₵500 million of revenue that otherwise would be lost to tax exemptions.
Stakeholders and analysts have pointed to resistance from interest groups and individuals for the inability of the 7th Parliament to pass the bill. Minority member of the finance committee Richard Acheampong tells Starr News the Executive has no interest in getting the bill passed. According to the Bia East MP the committee is yet to look at the bill since its referral more than a year ago. He singled out deputy finance Minister Kwaku Kwarteng for blame.
“The government is not interested so the chairman has shelved the bill. I single out deputy finance Kwaku Kwarteng who made a lot of noise in opposition against Tax Exemptions but in government he’s the one shepherding all the tax exemptions for government in Parliament. That’s how much power can change people” He stated.
Some stakeholders including Policy Analyst with the Integrated Social Development Centre, ISODEC Bernard Anaba are pushing for the bill to return to the 8th Parliament. Mr. Anaba who is also a member of the Tax Justice Network however wants the bill to return in much better form.
Mr. Anaba wants government to take a critical look at double taxation agreements the state enters into with other countries as a way of shoring up the country’s revenue. Speaking at a media engagement on Tax Exemption Bill, Mr. Anaba advised against blanket exemptions in the bill.
“The incentives must not permit market provisions where all the tax handles are zero rated irrespective of policy implications. Government must be able to exclude some specific taxes and levies such as GETFund, NHIS Levies on some exemptions. Blanket incentives must be stamped out” He stated.
There are also concerns about unavailability of data on tax incentives in the country. According to the IMF Ghana in 2013 lost 5.2% of its GDP to exemptions. There is therefore a demand for more transparency in the bill to ensure data on exemptions are readily available and accessible to the general public.
The Bill gives the minister of finance the powers to submit a request for an exemption to cabinet or parliament. Stakeholders are therefore demanding more accountability clauses in the bill to compel the finance minister to publish cost benefit analysis of such exemptions.
Another provision the civil society wants clearly spelt out is exemptions to the President.
Clause 9. (1) which talks about the President says:
“Goods imported by the President for the personal use of the President are exempt from customs duties, taxes and port charges. (2) Where an enactment provides for an exemption for the President, the exemption shall be for the personal use of the President. (3) For the purposes of this Act, the Office of the President is a department of Government and shall not, for the purposes of the administration of exemptions, be treated as the President. (4) A person who makes an application for an exemption in the name of the President which is not for the personal use of the President commits an offence and is liable on summary conviction to a fine of not less than one thousand penalty units and not more than two thousand five hundred penalty units or to a term of imprisonment of not less than six months and not more than five years or to both”. The Bill states.
The above provision has always been abused according to Mr. Anaba. He emphasizes the provision above covers only the President and not the Presidency as has always been interpreted. .
Chairman for the finance Committee Dr. Mark Assibey-Yeboah has confirmed to Starr News the Bill cannot be passed before the 7th Parliament expires come mid-night on January 6, 2021.
“Given the time left for the 7th Parliament to expire, it’s practically impossible for the committee to put together a report, present to the plenary for approval before passage of the Bill” Dr. Assibey-Yeboah stated.
Minister of Finance Ken Ofori-Atta in his 2019 Mid-Year Budget review presentation said the passage of the Tax Exemptions Bill would also help minimize its abuse. Government had the backing of the International Monetary Fund (IMF) to overhaul the country’s tax exemptions regime in order to address failing domestic revenue. The IMF in its 2019 review of Ghana’s economy said rationalizing tax exemptions will improve government’s domestic revenue mobilization.
The Bill has also pointed out some challenges with the current exemptions regime underscoring the need for an overhaul.
“In the last eight years, tax exemptions namely import duty, import value added tax, import National Health Insurance Levy and domestic value added tax in the economy have grown from three hundred and ninety-one point nine zero million Ghana Cedis which is zero point six per cent of the gross domestic product for 2010 to four thousand six hundred and sixty-two point three six million Ghana Cedis which is one point six per cent of the gross domestic product for 2018. The figures do not include exemptions from the payment of corporate and individual income taxes, concessions on tax rates, petroleum tax reliefs, customs tax exemptions enjoyed by diplomatic missions and waiver of processing charges at the ports. These exemptions are growing at the expense of tax revenue”.
“For every one Ghana Cedi of tax collected, the corresponding amount given away as exemptions has increased from six pesewas to twelve point five pesewas between 2010 and 2018. Further, exemptions may distort fair competition among businesses in the same industry where private projects are granted exemptions to improve their profitability or viability, which are not available to other players of the same industry. The current challenges of the exemptions regime are sustained by the existence of pre-determined tax exemptions in various legislation for future projects whose financials cannot be known today. The situation is not helped by an entrenched policy mindset on the part of both Government entities and private suppliers that, by default, businesses that supply goods, services and projects to the public sector should be exempted from payments of customs and some domestic taxes”.
Stakeholders have therefore vowed to pile up pressure on the Executive for the bill to be returned Parliament for passage given the enormous benefits to the state.
By: Ibrahim Alhassan