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General News of Monday, April 8, 2019
Source: Graphic.com.gh
2019-04-08
Seth Terkper, former finance minister
Seth Terkper, a former finance minister, has warned the government against implementing popular voter policies that tend to hurt the economy in the long run.
He cited the reduction of import reference values as one of the measures likely to accentuate the steady fall in domestic revenues and to attract the government to accumulate more debt to meet growing expenditure needs.
In an interview last Saturday, Mr. Terkper said that the introduction of the policy at a time when revenues had been steadily declining since 2016 "raises the question of whether it has already been discussed in depth".
The benchmark valuation being the value in cedi on which import duties are calculated, he stated that a reduction of this value by 30% for vehicles and by 50% for other imports "can lead to an immediate fall in revenue".
"Before arriving in the medium term, when you want to become competitive with the ports to be able to attract volumes, we must be prepared to face the fact that a reduction of 30 to 50% of the reference values will affect the tariff. basis collected by the Customs Division of the Ghana Tax Administration, "he explained.
Customs collections
In 2017, the Customs Division missed its target of 8.63%.
The Commissioner General of the GRA, Mr. Emmanuel Kofi Nti, declared that the customs authorities had collected 12.7 billion GH ¢ against a target of 13.9 billion GH ¢.
The deficit rose to 18.6% last year, with real collections in 2018 amounting to 13.19 billion GH, against a target of 16.21 billion GH, said Mr. Nti in January of this year.
Mr. Terkper, tax expert, explained that in addition to the basis on which import duties were calculated, the reduction in reference values could also affect excise duty collections, reinforcing and the implications of the policy on total revenue collection.
"If you change the basis of calculation, you are not only changing customs duties, which are the basic customs duties, but you are also likely to change it for excise duties.
"It's because there's an excise tax on imported vehicles and it's going to be affected. In addition, will you switch to Value Added Tax (VAT)? He asked.
These training effects, he said, could result in "a significant loss of income at a time when the GRA is already struggling to meet its revenue targets."
On an annual basis, domestic revenue collected by GRA has been lower than budget since 2016.
Consolidated fund
Mr Terkper also wonders about the legality of the reference values, explaining that their continued existence means that the country is superimposing the reference values, previously called the Commissioner's values, on the values of the invoices.
He recalled that after the introduction of the one-stop system in the ports, the country had started to move towards the base of the World Customs Organization, billing base, endowed from a solid customs database for prices and clbadifications.
He added that the reduction of certain fees collected in ports could also affect revenue inflows into the consolidated fund.
"Some of these fees are also internally generated funds (IGF) for some of the named agencies. So, what concerns me now is that those who go to the Consolidated Fund will allocate budget revenues and the part that goes to the agencies will affect their IGFs.
"So the question is: what is the proposal to replace all these likely losses of revenue at a time when customs are already struggling?", He asked.
He asked the traders to be moderate in their jubilation because of the reduction, saying that similar reductions in the past have proven to be short-lived.
He cited the announcement of the recalibration of the value-added tax (VAT) rate, which had initially been misinterpreted as a reduction; the reduction of taxes on spare parts, which has proven to be false, and the continued existence of taxes supposedly to be abolished for 2018 as an example.
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