The Ghana COVID-19 National Trust Fund and the Ghana COVID-19 Private Sector Fund, have raised vital resources to fight the pandemic, a tax report commissioned by the Ghana Anti-Corruption Coalition (GACC), has revealed.
The report observed that after the two funds were set-up, millions of dollars were donated by individuals and corporate bodies in response to Government’s appeal towards containing the pandemic.
Mr John Okyere, a Tax Consultant, who presented findings of the report at a dissemination workshop, organised by the GACC in Accra, lauded the Government for establishing the National COVID-19 Trust Fund, as well as the move by private individuals to establish the COVID-19 Private Sector Fund.
The report dubbed “Promoting Equity in Tax Incentives and Tax Exemptions in Ghana,” was funded by Oxfam.
He said Government’s decision to introduce a tax incentive to the donations to ensure tax deductible and all associated value added tax (VAT) were exempt, was a laudable idea.
“It is obvious that this has encouraged more companies to commit their resources (both in cash and in kind) to support Government’s response.”
He said although it was a great initiative, care must be taken to ensure that corruption and overstatement (of cash value) of non-cash donations was reduced.
He said incentives granted to donor organisations could potentially build a positive relationship between the Government and the business community.
“Tax avoidance is very high in Ghana, mainly due to lack of accurate data about taxpayers. However, this problem can be partly addressed by donations as the tax authority becomes more aware of donor (companies) and their financial positions,” Mr Okyere stated.
He said the donations, which would partly be motivated by the associated tax incentives could strengthen corporate values as people became aware of such contributions; adding that with the growing of ethical consumerism in Ghana, there was a high possibility that consumers might view donors as responsible corporate citizens, which might influence their relationships with such companies.
He said despite the benefits, the incentives granted to donors, come at a cost; declaring that first, by making all qualifying donations tax deductible, the Government had received future tax revenue now.
Mr Okyere said apart from a few (individuals) who might not want to claim such deductions, the corporate bodies, which were for profit would see that as an excellent opportunity to reduce their tax liabilities.
He said that implied that in the coming years, the Government, in principle, would lose tax revenue.
Mr Okyere said furthermore, the incentives, although were good at supporting Government’s revenue needs, it provided a strong bleeding ground for corruption.
He said some of the donations were provided in kind (goods), which were subsequently valued; it was not clear how the valuations were done and who oversees the determination of the financial equivalence of non-cash donations.
Mr Okyere, who said in the coming years, donors would start making the allowable deductions, noted that the Ghana Revenue Authority (GRA) would be required to allocate resources both human and material to monitor and ensure that taxpayers did not overstate claims and that deductions were in line with existing tax regulation and the provisions in the COVID-19 donation tax incentives.
Mr Okyere, who also presented another report on “Political Parties Tax Positions – Election 2020”, said it was critical considering the impact of the COVID-19 pandemic on the country’s finances for the tax exemption regime to be reformed; saying “the exemption bill has to be passed to reduce the free taxes given away.”
Mr Geoffrey Ocansey Kabutey, Executive Director, Revenue Mobilisation Africa, said it was difficult collecting tax and therefore, the little that was collected must be spent judiciously; stating that whatever government did with the taxes of the people, it must be made known to them in a participatory manner.
Mr Bernard Anaba, a Policy Analyst at the Integrated Social Development Centre (ISODEC), who chaired the function, said tax was what helped the nation to move forward and that “without tax the Government will not govern.”