Reduce tax incentives to fund education - Report

Mr Bernard Anaba, Acting Coordinator, Tax Justice Coalition a Civil Society Organisations (CSOs), has advised the government to reduce the tax incentives to multinational agencies.

He said this would enable the government to raise enough revenue to fund the country’s educational sector.

Mr Anaba, who was presenting a CSOs Report on the Educational Sector in Accra, said the huge tax incentives coupled with many benefits granted to multinational corporations that invested in the country was depriving the state of vast revenue.

The survey was conducted by ActionAid Ghana and Tax Justice Coalition (TJC) in August this year to ascertain the effect of tax incentives on basic education funding in the country.

It was on the topic: “Tax Incentives: What Tax Incentives can do for Basic Education in Ghana.”

The report said Ghana, between 2018 and 2020 lost $901.1million as tax incentives through parliamentary tax waivers alone to corporations.

Also, about $657million was lost through the Ghana Investment Promotion Center’s investments in 2018.

“By estimation, the country grants an average of 19.6 per cent per initial value as tax incentives,” it said.

Meanwhile, it noted that government expenditure allocation to the education sector fell short of the Global Partnership for Education (GPE) target of 20 per cent, with an average GHc4.198 million funding gap.

“It showed a fluctuating trend between 13 per cent and 16 per cent (2016-2021) with its highest peak at 16 per cent in 2019,” the report said.

The report added: “This is a huge amount which could make a greater impact in the education sector if this funding need is met. It, therefore, means the government’s allocation to the education sector require increases in the government’s overall revenue pot to be able to plug this funding gap.”

Mr Anaba explained that the report on the educational sector was focused, particularly at the basic level, and showed that it had witnessed low financing over the past years, leaving the sector to exploitation by private school owners.

He said the Coalition identified that cutting down on the incessant tax holidays would enable the government to accrue enough revenue to deliver more development project.

He said providing more schools and learning materials to drive the country towards achieving the Free Compulsory Universal Basic Education and eventually the Sustainable Development Goal Four, requires more funding.

“The government’s elaborate Value Added Tax (VAT) exemptions are depriving the state of needed revenues. VAT exemptions should be more effectively targeted to lower-income households or to sectors that generate positive social and economic externalities,” he said.

Mr Anaba, who is also a Policy Analyst at the Integrated Social Development Centre (ISODEC), urged parliament to expedite passage of the Tax Exemption Bill to regulate the sector and enable the state to earn more from its vast investment opportunities for development.

He also called on the government to put in measures to block all illicit financial flow, widen its tax base to generate more revenue to deliver development for the people, including education.

Mr Sumaila Abdul-Rahman, the Country Director of ActionAid Ghana, said: “the fact that Ghana lost $901m to tax incentives through parliamentary tax waivers and the fact that 20 per cent of that amount could have provided more school infrastructure to pupils, raises a crucial point that should put things in perspective for all of us”.

He, therefore, urged the government to revise tax treaties and tax incentives regime and strengthen the tax system to increase domestic revenues for development, including investment in education.

Mr Louis Acheampong, the Vice-Chairperson at TJC, on his part commended government for funding the Free Senior High School (FSHS) programme through the revenues accrued from the country’s oil sector.

He, however, appealed to government to strengthen its negotiation prowess to enable the state to earn more from the exploration of its enormous mineral base to fund projects, particularly in education such as the FSHS initiative.