Hon. Ken Ofori Atta, Ghana's Minister of Finance and Economic Planning, has stated categorically that government will endeavour to discover and remove revenue leakages in Special Economic Zones and others. The finance minister stated this in a 2021 mid-year fiscal policy review to Parliament.
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The Revenue Assurance and Compliance Enforcement (RACE) will “identify and eliminate revenue leakages in areas such as petroleum bunkering, gold and minerals export, port operations, transit goods, warehousing, border controls and free zones operations, to name but a few”, according to Ghana's Minister of Finance and Economic Planning Hon. Ken Ofori Atta.
This has occurred at a time Public Services International (PSI) and its affiliates and allies in Ghana have been campaigning in the last four years for the removal of ‘wasteful’ tax incentives in the Ghana Export Processing Zones (a Special Economic Zones model).
Tax exemptions in Ghana could be used to employ 10,000 nurses or teachers for more than ten years.
Ghana developed the Ghana Export Processing Zones in 1995 with the goal of increasing exports, creating jobs, and attracting foreign direct investment, as with most developing countries. However, despite large tax benefits offered to enterprises operating in the zones, the effectiveness of this economic model falls short of expectations 25 years later.
According to a research report produced by PSI in 2019, "Tackling Tax Incentives, Ghana", tax exemptions provided by the government was GH2.6 billion (US$475 million) in 2017. That's about a tenth of the year's tax income and more than six times the amount set aside for a free public senior high school for the same period. This amount is sufficient to employ 10,000 nurses or teachers for more than ten years.
Taxing citizens heavily
Ghana's government has concentrated primarily on taxation as a post-covid economic recovery policy:
a one-percentage-point increase in the NHIS from 2.5% to 3.5%;
increase in the flat rate of VAT from 3% to 4%;
introduction of a sanitation and pollution levy of 10p per litre of petrol/diesel;
introduction of a 20p per litter of petrol/diesel energy sector levy.
Since its implementation in May and June, prices of products and services, especially transportation costs, have skyrocketed. These policies, according to tax experts, are extremely burdensome for citizens.
Meanwhile, public sector base pay was only boosted by 4% for 2021, against a 15% increase requested by workers. And the national minimum wage was increased from GHS11.82 ($1.96) to GHS12.53 ($2.08).
With a rising public debt at 81.47%, to GDP, and the need to fund education, healthcare, create employment and improve on the livelihood of Ghanaians, this policy requires the political will from the government. Collaboration with trade unions, civil society organizations, and other professionals should be encouraged in this endeavour.