The Institute of Economic Affairs (IEA) said Ghana’s natural resource regime has been insufficient inactive as a result of concessions being offered to foreign companies and tax mobilization is low in the informal sector.
According to the Director of Research at the IEA, Dr John Kwakye, the results of these lavish concessions has been the impoverishment of Ghana’s economy and mining communities.
Reacting to the mid-year budget review presented last week at a press briefing in Accra, Dr Kwakye on Tuesday, July 28 said; “When we discovered oil in 2007 and started commercial production in 2010, it was thought that we would learn from the mistakes of the defective mineral fiscal regimes. Unfortunately, we have been repeating the same folly of signing concession contracts whereby investors are given ownership of oil blocks while Ghana barely benefits from meagre royalties, taxes carried and participatory interest, since the discovery of oil and production in Ghana, the country’s share of the total output is estimated at about only 15 percent and valued at around US$15 billion.
This means, foreign oil companies that have concessionaire agreements in Ghana have pocketed 85 percent or nearly US$30 billion of the total proceeds from oil revenue.
He want on to talk about tax mobilization and said, government needed to strengthen tax mobilization, especially in the informal sector, in the wake of the COVID-19 pandemic.
The institute said the informal sector contributed about 30 per cent of the country’s Gross Domestic Product (GDP), adding that, stretching out the tax net to the sector had the potential of increasing revenue to fund government’s expenditure.
He said tax exemptions to certain persons and institutions constituted over GH¢5 billion and called on Parliament to expedite the passage of a tax exemption bill which would curtail the menace.
He said, “One key area of revenue mobilization which could facilitate government’s expenditure which is mostly overlooked is taxes from properties we term property tax.
“This could be assigned to the assemblies, which would, in turn, generate funds for development at the local level”.
He reiterated that Ghana’s tax efforts were low and called on the government to track revenue leakages to increase the tax to GDP ratio.
Dr Dede Amanor-Wilks, the Executive Director of IEA, said it was important for the government to be concerned about meeting revenue shortfalls to grow the economy.
She said strengthening revenue mobilization was critical to building a resilient economy and called on the government to increase its industrialisation drive, adding that “industrialisation is a pre-requisite for development