Yaw Mensah: Ghana’s fiscal governance – The situation is alarming

At a time when Ghana’s #FixTheCountry movement is still a powerful force (particularly on social networks), when the President’s record is regularly slammed and civil society is calling for an end to corruption, recent goings-on at the Ghana Revenue Authority (GRA) have further dented any trust that the people might have had in the country’s public authorities.

Ghana has plummeted 48 places in five years in the Doing Business ranking, it’s lost 24 points in the Corruption Perceptions Index published every year by NGO Transparency International, it’s lost nearly US$2 billion worth of state budget according to the UNDP… the list goes on.

How much further will these business confidence indicators fall… and how much worse do things need to get? Against a backdrop of a difficult economic climate and with corruption scandals hitting the headlines thick and fast, we can now add suspicious practices at the GRA to that list. And this comes at a particularly bad time – the country is facing a heavier tax burden in a bid to help relaunch the post-Covid economic recovery.

Fake clearance certificates

On 11 October, a MyJoyonline article detailed suspicious goings-on at the revenue authority, which is tasked with supervising the collection of taxes and issuing clearance certificates to commercial organisations.

Basically, a number of GRA officials have been helping companies bidding for contracts to bypass the tax records procedure – all for the paltry sum of 1500 GHS. The result is that newly created companies have been able to acquire this precious document, proving that they have met their tax obligations – and even without any evidence of work.

Despite the fact that the GRA has pledged to conduct an enquiry to establish the facts and to sanction the employees involved, the people of Ghana are nonetheless outraged – as are a number of public figures who have called for the authority to be brought under internal control.

Edem Senanu, co-chair of the Citizens Movement Against Corruption has demanded that the GRA’s internal control systems be bolstered to put an end to these frequently occurring incidents of fraud and corruption.

Joe Winful, Board Chairman of the Internal Audit Agency said that the news that the GRA had been issuing fake certificates was no surprise. Speaking on Joy FM’s morning show, he acknowledged that such acts were frequent at the Authority and said that they were the result of weaknesses in the current control mechanisms.

“The absence of punitive measures is what encourages others to continue such practices”, he said, expressing his concern over the huge sums of money meant for the public purse which end up in the pockets of GRA officials. MP Kwaku Kwarteng has also called upon the GRA to punish guilty members of its staff severely.

All of this comes at a bad time

These revelations come at a particularly bad time – just as the country’s Finance Minister is about to unveil his 2022 budget to the Ghanaian Parliament. This is scheduled for 15 November at the end of a period that has seen a raft of measures brought in to bolster tax revenue.

These have included the introduction of new excise tax stamps, the rollout of tax ID numbers to make it easier to identify eligible taxpayers in the informal sector, higher taxes for players in the e-commerce sector, continued deployment of ICT tools designed to enable people to pay their taxes more easily (as well as preventing tax fraud and tax evasion) and stricter measures for prosecuting tax evaders, as well as the creation of a special court.

All these measures are designed to raise tax revenue by a third compared with 2020 – when all economic sectors were hard-hit by the pandemic.

At a time when tax revenue relative to GDP has been stagnating at around 13% in Ghana – as opposed to an average of 19% across the rest of sub-Saharan Africa – the government is continuing with its raft of reforms designed to widen the tax base.

These include the new integrated customs management system at the country’s ports for managing and collecting customs duties and taxes more efficiently, as well as the introduction of taxes on rental income. This desire on the part of the GRA to rationalise and optimise its tax income may be legitimate, but such measures will not be well received unless its governance system is flawless.


Source link : https://www.myjoyonline.com/yaw-mensah-ghanas-fiscal-governance-the-situation-is-alarming/

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Publish date : 2021-11-17 23:03:54

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