Leslie Dwight Mensah
The Institute for Fiscal Studies (IFS) has called on government to fast-track the passage of the law to regularize tax exemptions.
It said government must reconsider the under-taxation of the mining sector which stems from the overly-generous rebates offered to mining companies in the original agreements signed with them.
In its post-budget analysis presented at a press conference recently in Accra, Leslie Dwight Mensah, a fellow at the institute, said there should be a review of mining agreements to bring taxes paid by the companies in line with the current high profits being generated in the industry to meet international standards.
Tax to GDP ratio
The IFS stated that the tax-to-GDP ratio for 2019, projected to be 13.1%, was 0.5 percentage points above the projected 2018 figure of 12.6%.
“The 2019 ratio is still nowhere near Ghana’s potential or that of its peers. Even more disappointing is the fact that over the medium term, the tax-to-GDP ratio is projected to rise marginally to only 13.3% in 2020 and then thereafter retrogress to 12.9% in 2021 and further to 11.9% in 2022.
“These figures suggest that Ghana is still not getting it right when it comes to tax collection and that more innovative measures are needed to further scale-up the effort in that regard. Without sustained effort to this end, not only will long-term fiscal sustainability be elusive, but also economic growth will be seriously compromised while the vision of “Ghana Beyond Aid” will remain a dream.”
It said Ghana had sought IMF financial assistance 16 times in its history because the country had failed to exercise the needed fiscal discipline that the IMF programme usually imposed on it.
“It’s only by entrenching macroeconomic stability that we can place the economy on a path of sustained strong growth, job creation and prosperity for all Ghanaians. Government has indicated its intention to pass a Fiscal Responsibility Law (FRL) in line with its commitment to ensuring irreversibility of the macroeconomic gains.
“The FRL will reportedly encompass a fiscal rule that will place the budget deficit within a 3-5% band. There is available empirical evidence that suggests that a deficit within that range is likely to ensure long-term fiscal and debt sustainability.”
By Samuel BoadiRead Full Story