Expensive Hon. Finance Minister (Tax Specialist)
As you put together to current the nation’s price range for 2025, I urge you to first take into account the income accessible earlier than figuring out expenditure ranges. A sustainable fiscal coverage should prioritize income mobilization whereas making certain environment friendly spending.
The necessity to curb extreme Tax Exemptions
My first focus is that tax exemptions have to be diminished to the barest minimal to protect nationwide income. The World Tax Expenditures Database (GTED) Report 2023 highlights the shortage of transparency surrounding tax exemptions globally, with many governments failing to supply complete knowledge or consider the influence of tax expenditures. Which means in lots of circumstances, tax exemptions are granted with out clear assessments of their financial advantages. Ghana isn’t any exception. In 2023 alone, complete tax exemptions had been estimated at GHS 4.6 billion, a major lack of potential income.
However, as chances are you’ll remember, a superb tax system ought to encourage financial dynamism and progress in a extra environment friendly means by means of decrease tax charges on a broader tax base. Enterprise alternatives, fairly than tax planning, needs to be the driving power behind enterprise and funding selections. If traders are solely coming into Ghana due to tax exemptions, it appears to me that such traders could not have the curiosity of our nation at coronary heart. Sadly, Ghana’s present selective tax exemption insurance policies usually are not serving nationwide improvement pursuits, as many multinational firms make location selections based mostly on tax reliefs fairly than financial alternatives. Within the financial challenges we face, particularly underneath an IMF program, Ghana wants companies and traders who will make selections based mostly on financial potentials and solely on tax financial savings.
We want a deliberate discount plan in selective preferences of tax exemptions and fairly concentrate on reducing tax charges to spice up funding and job creation. Now, allow us to take into account exemptions granted on the port since 2020.
| 2023 | 2022 | 2021 | 2020 | |
| Beneficiaries | (GHSM) | (GHSM) | (GHSM) | (GHSM) |
| GNPC (OMC Oil Imports) | 595.59 | 364.12 | 160.23 | 178.36 |
| Gov’t, Privileged Individuals & Organisations | 783.41 | 455.15 | 268.59 | 209.45 |
| Ghana Funding Promotion Centre (GIPC) | 1.18 | 88.27 | 45.70 | 31.69 |
| Common Exemption Per Tariff | 35.92 | 797.40 | 514.11 | 312.99 |
| ECOWAS Exemption on Imports | 6.4 | 4.4 | 2.4 | 114.36 |
| Parliamentary Exemptions | 1,710.87 | 1,491.47 | 1,337.75 | 864.25 |
| Particular Permits | – | – | 0.61 | 3.10 |
| Ghana Export Promotion-EU | 0.02 | 0.09 | 0.02 | |
| Ghana Automotive Improvement Coverage | 14.85 | 7.43 | 1.15 | |
| AfCTA | 2.22 | 0.11 | – | – |
| Whole Direct Port Exemption | 3,535.33 | 3,470.10 | 2,463.86 | 1,714.21 |
Supply: GRA Annual Stories
The tax exemptions knowledge introduced within the desk highlights a regarding development of rising exemptions in Ghana. Over the 4 years, complete direct port exemptions greater than doubled from GHS 1.71 billion in 2020 to GHS 3.54 billion in 2023, demonstrating an growing tax expenditures that erode authorities income. Parliamentary exemptions alone surged to GHS 1.71 billion in 2023, making them the most important element, which warrants higher scrutiny given the nation’s financial challenges.
The Ghana Nationwide Petroleum Company (GNPC) additionally obtained rising exemptions for oil imports, reaching GHS 595.59 million in 2023. This raises issues about whether or not such waivers are justified within the face of Ghana’s fiscal constraints. Whereas basic exemptions declined considerably in 2023, dropping from GHS 797.40 million in 2022 to GHS 35.92 million, the general tax expenditure burden stays excessive. Funding-related exemptions underneath the Ghana Funding Promotion Centre (GIPC) noticed a drastic discount, suggesting a shift in authorities coverage to curb extreme tax incentives granted to companies. Equally, ECOWAS import exemptions have been inconsistent, with a steep decline from GHS 114.36 million in 2020 to simply GHS 6.4 million in 2023, which can point out adjustments in regional commerce insurance policies.
Hon, I conclude with a name for reform. The 2025 price range should mirror a deliberate discount in tax exemptions. On this regard, we should
- Eradicate pointless exemptions that don’t immediately contribute to financial progress or job creation.
- Strengthen tax transparency by making certain that each exemption granted is topic to rigorous cost-benefit evaluation. When beneficiaries can’t meet the circumstances, they need to refund the taxes.
- We must always concentrate on broad-based tax reforms by reducing general tax charges whereas minimizing selective exemptions.
Allow us to use tax exemptions sparingly and strategically to assist key sectors that drive industrialization, job creation, and long-term financial stability.
I WILL CONTINUE however for now,
Yours faithfully,
By: Francis Timore Boi Esq
The author is a Tax Marketing consultant and a member of the Chartered Institute of Taxation Ghana.
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