…IFS targets mining sector
As the Finance Minister indicated that the draft policy to reduce tax exemptions has been completed, the Institute for Fiscal Studies (IFS) has called for a complete overhaul of the existing agreements with mining companies.
This is the latest call from among several institutions, policy think tanks and influential individuals
The proposed reforms would address the widely perceived under taxation of the mining sector as the result of the overly-generous rebates offered to mining companies in the original agreements and subsequent stability agreements signed with them.
At the post 2019 budget statement in Accra on Tuesday, the Institute recommended that this review should be in line with the current profits being generated in the mining industry, as well as best international standards and practices.
Tax exemptions in Ghana have invariably provided the opportunity for abuse. These irregularities notwithstanding, the exemptions in themselves, have deprived the country of much needed revenue, resulting in below target revenue collection.
Data from the Ghana Statistical Service (GSS), shows that the mining sub-sector in 2016 and 2017 contributed GH¢15,366 million and GH¢ 20,092 million respectively.
Over the last eight years, tax exemptions (on import duty, import VAT, import NHIL and domestic VAT) in the economy have grown from GH¢391.90 million (0.9 percent of GDP) in 2010 to GH¢5,269.99 million (2.6 percent of GDP) in 2017.
These figures do not include exemptions from the payment of corporate and individual income taxes, concessions on tax rates, petroleum tax reliefs, as well as customs tax exemptions enjoyed by diplomatic missions, and processing charge exemptions at the ports.
Over the same period, about six different studies have been conducted into Ghana’s tax exemptions regime by the Revenue Policy Division of the Ministry of Finance, International Monetary Fund (IMF), Organisation for Economic Cooperation and Development (OECD), GIZ and the World Bank.
All these studies have concluded that, the growth in Ghana’s tax exemptions and reliefs is unsustainable, and the benefits Ghana’s economy gets from these exemptions and reliefs are doubtful.
By Joshua W. Amlanu
