Tax is very essential to the growth and development of any country; it is the most sustainable source of domestic financing. The level of influence that tax revenue has on financing the affairs of any country cannot be downplayed.
Taxes are the building blocks of society – they pay for essential public services and infrastructural development like the building of school structures, health facilities, road networks and potable water. Taxes also facilitate the recruitment of qualified human resources to oversee these and maintain the facilities.
Despite the enormous benefits of taxes, there are many schemes that have plagued the tax systems of developing countries like Ghana. Consistently, companies conceal information, shift profits and avoid filing their returns altogether where they operate. The result is that developing countries lose hundreds of billions of dollars every year while large companies make huge profits from their natural resources and workforce.
Today, we are equally plagued by the novel Corona Virus that has shaken countries’ finances, if not plunged governments into unintended budgeting and expenditure. This time demands that we pool resources from all sectors and use state funds to meet the health and economic emergencies that the pandemic presents. It requests a multi-stakeholder approach to show a sense of responsiveness to human lives and support in responding to the health crisis, such is why the COVID-19 Fund was set up.
While the intent of the Chairperson of the COVID-19 Trust Fund is laudable, it is in sharp contradiction to the demands of the COVID-19 pandemic. Sophia Akuffo’s position that companies that have donated to the national fund will enjoy some tax reliefs is a bit unnecessary. Tax relief is any program or incentive that reduces the amount of tax owed by an individual or business entity. This gesture is good; it is to presumably encourage other companies to cultivate the example of those that donated to the COVID-19 fund. However, the state may not be ready to grapple with the dire consequences that may follow.
Multinational corporations do not need tax incentives. The tax giveaways that the government has already provided to businesses are enough to spur them on to profits. Our leaning toward providing tax reliefs to those who contributed to the fund will only intensify the government’s duress to finance the containment of the Corona Virus and to flatten the curve. Add to that, the reliefs that are being offered companies that contributed to the COVID-19 fund can contribute to ongoing projects to adequately deal with the inequalities that exist internally given the varying levels of development across the country, areas that are hit the hardest in times of crisis like the one we are experiencing now.
An ActionAid research shows that three countries alone – Ghana, Nigeria, and Senegal – are losing up to $5.8 billion a year. If the rest of ECOWAS lost revenues at similar percentages of their GDP, total revenue losses among the 15 ECOWAS states would amount to $9.6 billion a year. These monies can go a long way to finance gender-responsive public services across the sub-region and to boost governments’ support to key groups and affected populations during the pandemic in a sustainable way. No state is ever adequately prepared to address pandemics; in fact, crises tend to escalate the hardships of women, children, young people and persons with disabilities. These groups bear the brunt of such pandemics and the double challenge of accessing essential services and support from the state. Often governments embark on blanket and knee- jerk programming that are often insensitive to the needs of these affected groups.
Recommendations
- Do not offer tax reliefs to contributors to the COVID-19 Fund as they do not need it and it instead makes complex the use of tax revenue to respond to the COVID 19 to offer reliefs to companies where affected communities can benefit
- Adopt an evidence-based approach in the use of the fund to inform those who benefit from interventions through needs assessment and targeted programmes.
- Respect, protect and fulfil the rights to good health and wellbeing through responsible financing of national health priorities
- Ensure equity, equality, and inclusive participation among stakeholders in decision making regarding the financing response to the COVID-19 pandemic.
- Adopt and enforce accountability and transparency in the use and disbursement of the COVID-19 Fund by publishing records
- Adopt constitutional measures to influence the approach to show appreciation to the contributors of the fund
- Use a risk assessment-based approach to measure the value of offering tax reliefs and what benefits the state will gain in the process;
References
- https://ghana.actionaid.org/publications/2015/west-african-giveaway-use-abuse-corporate-tax-incentives-ecowas
- http://www.osiwa.org/wp-content/uploads/2015/05/Tax-Incentives-in-West-Africa.pdf