Gh¢2.1bn Lost In 2015 . . . IMF Unhappy About Tax Exemption Regime
While government continues its borrowing spree, a whooping GH¢2.1billion (GH¢2,103.31) of tax revenue has been lost to exemptions granted in 2015.
This means exemptions in 2015 has jumped by over GH¢887million from GH¢1.2billion (GH¢1,216.01 million) in 2014 to GH¢1.2billion (GH¢2,103.31).
This situation is creating a worrying for taxmen, policy analysts and the country's non-concessional lenders because it is believed that the system is abused.
The ideal tax system should raise essential revenue without excessive government borrowing, and should do so without discouraging economic activity and without deviating too much from tax systems in other countries.
The figures are contained in a Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding Ghana sent to the International Monetary Fund (IMF) in September 2016, requesting the IMF Executive Board to complete the third review of Ghana’s Extended Credit Facility (ECF) arrangement and approve the disbursement of the fourth tranche of the loan based on the satisfactory implementation of performance criteria (PC).
The 51-page letter dated September 16, 2016 was addressed to Ms Christine Lagarde, Managing Director of the IMF.
The letter was jointly signed by Finance and Economic Planning Minister, Seth Emmanuel Terkper and Governor of Bank of Ghana, Dr Abdul-Nashiru Issahaku.
The International Monetary Fund (IMF), which is overseeing the implementation of a three-year Extended Credit Facility Programme with Ghana, has raised questions about the country's import exemption regime and asked government to overhaul it.
In the letter, the government has pledged to strengthen its policies to rein in exemptions in 2016.
Experts have raised concerns about the tax exemption regime - which some Ghana Revenue Authority officials have cited as one of the biggest challenges to meeting revenue mobilisation targets.
A report by the Ministry of Finance and GRA team, for instance, estimates the average tax expenditure to GDP ratio at 2.01 percent. The tax expenditure to GDP ratio for 2013-2015 are 1.68 percent, 1.82 percent and 1.98 percent, respectively.
The Ghana Revenue Authority (GRA) missed its revenue collection target by three per cent in 2014. The GRA said GH¢17.07 billion was collected from the targeted GH¢17.61 billion. However, exemptions granted in 2014 was GH¢1.2billion (GH¢2,103.31)
The exceeded its 2015 revenue target of GH¢21.57 billion by GH¢620 million, representing an increase of 2.9 per cent. The 2015 revenue performance shows a revenue growth of GH¢5.014 billion, representing a 29.3 per cent increase over the target of GH¢8.13 billion in 2014.
The value of imports in 2015 was GH¢2.1billion (GH¢2,103.31). Taxation is the only practical means of raising the revenue to finance government spending on the goods and services that most of us demand.
However, setting up an efficient and fair tax system is far from simple, particularly for developing countries that want to become integrated in the international economy.
GH¢110b Debt as at July 2016
A Bank of Ghana (BoG) summary of Economic and Financial Data says Ghana’s total public debt has hit almost GH¢110 billion as at July, this year.
The GH¢110 billion public debt represents almost 66 percent of the total value of the economy.
Almost GH¢61 billion of the debt came from external borrowings whiles GH¢49.2 billion came from domestic borrowings.
Fresh $900m in loans
Parliament, by the time it rises tomorrow, Thursday November 3, 2016 would have approved fresh loans to the tune of $900 million.
All of the loans are said to have come to Parliament with Executive approval, without Cabinet's consent ad some Members of Parliament, especially the minority, say there is very little they can do about it.
Some of the loans are: 450 million Euro loan for the development of University of Environment, a KFW Frankfurt 13 million Euro loan, and 80 million Euros for the construction of phase II of the Tamale and Kumasi International Airports.
The rest include: a 350 million Euro, which has been earmarked for the construction of a railway line, and a 93.4 million Euro for the improvement of the transportation system in Accra.
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