FOREX RATE

Minority Leader jabs Kweku Kwarteng over tax exemptions

The Minority Leader Haruna Iddrisu is questioning why the Ministry of Finance is, on its own, writing to companies and revoking tax exemptions granted by Parliament.

Iddrisu believes such an action by the Ministry is in flagrant violation of the 1992 Constitution.

During the vetting of the Deputy Minister of Finance Kweku Kwarteng, the Minority Leader minced no words in chiding the action by the Ministry and demanded to know from the Deputy Minister why his soon-to-be boss, is violating the constitution.

Under Article 174 of the 1992 Constitution Parliament is clothed with the power to grant tax exemptions to companies based on the economic strategies of the government in power.

The law says;
(1) No taxation shall be  imposed otherwise than by  or under the authority of an Act of Parliament.
(2) Where an Act, enacted in accordance with clause (1) of this article, confers power on any person or authority to waive or vary tax imposed by that Act, the exercise of the power of waiver ďr variation, in favour of any person or authority,
shall be subject to the power approval of Parliament by resolution.
(3) Parliament may by resolution, supported by the votes of not less than two-thirds of all members of Parliament, exempt
the exercise of any  power from the  provisions of  clause (2)  of  this  article.

In conformity to that law, the Minority Leader said the legislative arm, had in the recent past given tax exemptions to some companies based on agreed principles and the roles the companies are playing in the economic growth and development of the country.

He argued by that same power, it is Parliament that must revoke the tax exemptions, insisting the Ministry has no power to issue a ministerial fiat to the companies to revoke that which has been granted by Parliament.

He did not however say which companies have had their tax exemptions revoked by the Ministry.

But the Deputy Finance Minister nominee, admitted that Parliament has the power to grant the tax exemptions but added the Ministry was attempting to regularize the tax administration in the country by writing to the companies.

Not impressed with his answer, the Minority Leader quoted the law and demanded to know from the Deputy Minister if the ministry went about revoking the tax exemptions to the companies the right way.

But the Chairman of the Appointment Committee of Parliament Joe Osei Owusus came to the defence of the nominee saying that Parliament indeed has the power to grant tax exemptions and waive same but if the Ministry has done something illegal, Parliament must go ahead and invite him to appear before the house and answer why he took that decision. It is not appropriate to ask a deputy minister nominee to answer same during vetting, he stated.

The New Patriotic Party promised, as part of the 2016 campaign, to reduce and remove some “nuisance taxes” it claimed were hampering growth in the economy.

When it won power, the Nana Akufo-Addo administration in its first budget, which was on the theme: “Sowing the seeds for growth and jobs”, the Minister of Finance, Mr Ken Ofori-Atta, said the government would abolish the one per cent special import tax, per cent Value Added Tax/National Health Insurance Levy (VAT/NHIL) on financial services and the 17.5 per cent VAT/NHIL on domestic airline tickets. There was also the commitment to stop the collection of market tolls paid by kayayei.

There was also the commitment to abolish the five per cent VAT/NHIL on real estate, import levies on spare parts, the 17.5 per cent VAT/NHIL on selected imported medicines not produced locally, replacing the 17.5 per cent VAT/NHIL with a three per cent flat rate for traders on the Ghana Stock Exchange (GSE), as well as giving tax credits and other incentives to businesses that employ young graduates.

These tax cuts which were to stimulate growth in the economy also had the potential of reducing significantly government revenue which will make it impossible for the government to fulfill many of its capital intensive projects including the one village, one dam, one district, one factory.

In order to make up for the lost revenue, the government decided to review all tax exemptions given to some companies.

The Finance Ministry insisted many organisations had been enjoying tax holidays at the expense of the state and wanted to revert the tax regime to some of these companies.

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