Minority in Parliament opposes attempt by government to introduce ₵7 billion tax waiver

The Minority in Parliament is opposing what it says are attempts by the Government to introduce more tax waivers.

The MPs argue that the development, if allowed, will only favour a select few and not the ordinary Ghanaian.

The Minority says it has identified a ₵7 billion tax exemption the government intends to introduce under the guise of One District, One Factory, which it believes will benefit government cronies.

Ranking Member on the Trade and Industry Committee and MP for Bole Bamboi, Yusif Sulemana, speaking to journalists, said the minority will kick against the waivers.

He questioned why government is bent on giving out up to ₵12 billion in tax waivers to cronies while ordinary citizens are taxed excessively.

Tax waivers, while intended to incentivize certain activities or sectors, can have negative effects on the Ghanaian economy if not carefully designed and implemented. Here are some potential drawbacks:

Reduced government revenue: Tax waivers directly decrease government revenue, which can limit its ability to provide essential public services like healthcare, education, and infrastructure. This can disproportionately impact vulnerable populations who rely heavily on these services.

Unfairness and inequality: Tax waivers can benefit specific businesses or industries, creating an uneven playing field for others. This can lead to increased inequality and stifle competition, hindering overall economic growth.

Corruption and abuse: The process of granting and monitoring tax waivers can be vulnerable to corruption and abuse. Unclear criteria or lack of transparency can create opportunities for businesses or individuals to exploit the system for personal gain, further eroding public trust and confidence.

Economic inefficiency: Tax waivers can distort market prices and incentives, leading to inefficient allocation of resources. Businesses that benefit from waivers may not be the most productive or efficient users of those resources, hindering long-term economic development.

Erosion of the tax base: Overreliance on tax waivers can weaken the overall tax base, making the government more dependent on other, less stable sources of revenue. This can make the economy more vulnerable to external shocks and limit the government’s ability to respond to crises.

Environmental damage: Tax breaks for certain industries, like resource extraction or polluting activities, can incentivize unsustainable practices that harm the environment. This can have long-term consequences for public health, food security, and overall well-being.

It is important to note that the negative effects of tax waivers can be mitigated through careful design and implementation. This includes:

• Clear and transparent criteria: Establishing clear criteria for eligibility and ensuring a transparent application process can help prevent abuse and ensure fairness.
• Monitoring and evaluation: Regularly monitoring the impact of tax waivers and evaluating their effectiveness can help identify unintended consequences and make necessary adjustments.
• Targeted interventions: Focusing tax breaks on specific sectors or activities with clear economic or social benefits can help minimize negative impacts on government revenue and overall economic efficiency.

Overall, while tax waivers can be a useful tool for promoting economic development, it is crucial to weigh their potential drawbacks carefully and implement them in a way that minimizes negative impacts and maximizes benefits for the Ghanaian economy as a whole.