Auditing firm, PriceWaterhouseCoopers (PWC) has asked Parliament to give the Tax Exemptions Bill the attention it deserves in such difficult times when the government is struggling to mobilise revenue.
The firm believes the passage of the Tax Exemptions Bill which was laid before Parliament in the 2019 will boost revenue mobilisation in the medium term.
This was contained in its highlights of the mid-year review and supplementary estimate.
Tax exemptions are growing at levels that many analysts are worried about, with the President in his state of the nation address, in 2018, describing it as a bane to the country’s development.
Data from the Ministry of Finance also indicate that in 2016, the country lost GH¢4 billion to tax exemptions. In 2011, tax exemptions cost Ghana US$2.4 billion, representing 6.13 per cent of its gross domestic product (GDP).
In 2013, tax exemptions jumped to US$ 2.5 billion, constituting 5.2 per cent of GDP.
It is estimated that for every one Ghana cedi of tax collected, the corresponding amount given away as exemptions has increased from six pesewas to 12.5 pesewas between 2010 and 2018.
Subsequently the Ministry of Finance, in the first quarter of 2019, laid before a Tax Exemptions Bill to consolidate and streamline the applicable exemptions in different laws and improve the transparency and certainty in dealing with tax exemptions.
However, after over a year now, the bill has still not been passed.
PwC therefore believes this is the best time for the bill to be given the needed attention and be passed into law.
Revised projected growth
Commenting on the revised growth targets, the Senior Country Partner of PwC Ghana, Mr Vish Ashiagbor, said the revised projected growth rate of 0.9 per cent for 2020 was a positive indication, given that most economies had slipped into recession under the weight of the COVID-19 pandemic.
Ghana’s economy was previously forecasted to grow at 6.8 per cent but the emergence of the virus and its attendant impact on businesses, among others, saw that growth rate readjusted to reflect the difficulties.
“While the reduction in growth is significant, it is at least a positive indication that the economy is not expected to contract in 2020, as is the expectation in many other economies across the world,” he stated.
Commenting on the revised deficit target of 11.4 per cent, Mr Ashiagbor said before the pandemic set in, the PWC was hopeful that the government would commit to its fiscal discipline path, despite 2020 being an election year.
He said while the revision to the fiscal deficit announced by the minister was inevitable, it posed significant long-term risks to the economy.
“More significant levels of growth are expected to return over the next four years and the fiscal deficit is expected to narrow over the same period, reaching 3.8 per cent in 2024.
“Clearly, barring any unforeseen windfalls in the short to medium term, it will be a long, hard road to recapture the gains made over the last few years that have been wiped by the impact of the pandemic,” he said.
He noted that the next few years would require a concerted effort by both public and private sector operators to rebuild what had been lost in the short term.
He advised businesses and individuals to continue to tighten their belts, re-strategise and adjust in order to survive and hopefully thrive, notwithstanding the pandemic.
“It is not all bad news, in that the rebuilding efforts offer another opportunity for economic policymakers, the managers of the economy, businesses and individuals to introduce new thinking and innovation into the rebuilding process such that our economy and businesses emerge from this pandemic in a more resilient and more diversified manner,” he stated.
He said it was encouraging to see some manufacturing companies quickly repurpose their operations to produce personal protective equipment (PPE), hand sanitiser and other items useful in the pandemic era.
“This a clear and encouraging demonstration of the innovation and capacity that exist locally and what is perhaps one positive outcome of the pandemic,” he pointed out.