According to the study, which was conducted on behalf of the National Coordinating Council of the Public Services International (PSI), there was the loss of revenue in excess of $4.9 billion from 1970 and 2008, as a result of the tax evasions by corporate groups, individuals, multinationals and other organisations operating in the country.
Bernard Anaba, a Policy Analyst at ISODEC, who revealed these in his presentation at a day’s conference on “Tax Justice and Public Sector Restructuring” in Accra, said such entities either dodge or evade taxes and under declare their incomes or engaged in illicit trade, which affected the tax net, leading to the running down of the national revenue.
He said taxes play a major role, especially in ensuring the redistribution of wealth in every country from rich individuals, funding essential public services and tackling poverty.
However these multinationals, for instance, evade taxes by setting up subsidiaries in developing countries, and operate in cross-border investment stocks through and route their profits through the borders via illicit means.
He explained that these were known as “tax heavens”, or “secrecy jurisdictions”, which enable individuals or companies to escape or undermine the laws, rules and regulations of other jurisdictions elsewhere, using secrecy as a prime tool, and further riding on the support of some lawyers and accountants, find innovative ways to cut their tax bills.
He said these companies usually ship their profits outside the country quickly and pretend not have made any profit at the end of the year.
Mr Anaba said the study also chanced on an Action Aid report on investment in Ghana, which revealed that the country loses $1.2 billion annually due to tax incentives, and in addition, 41 per cent of trade tax and 28 per cent of direct tax and Valued Added Tax (VAT) revenues were through exemptions in 2012.
The impact, he said includes revenue shortfalls resulting in deficits, which impede the ability of government to execute its fiscal policy, control excessive borrowing from both domestic and foreign sources, avoid relying on foreign aid, and ensuring the timely release of earmarked revenues for development activities.
According to him experiences from elsewhere had shown that multinationals, which avoided taxes, were usually slapped with heavy fines, to serve as a deterrent to others, and said Ghana could learn such experiences and lessons, and emulate.
The conference which was organised by the PSI in conjunction with its affiliate Unions including the Ghana Registered Nurses’ and Midwives’ Association, was to create awareness among workers in order to engage them in campaign and alliance building, to promote quality public services through a tax system that is fair, and also for them to be in a position to propose alternatives to public sector restructuring.
Mr Kwaku Asante-Krobea, who doubles as the President of the Ghana Registered Nurses’ and Midwives’ Association and Chairman of the National Coordinating Council of the PSI, called on the various unions in the public sector to form task forces to mount pressure on the government and the Parliamentary Sub-Committees to enact laws that would enhance and widen the tax net, and block all the current loopholes that exist within the tax system.
According to him tax justice as a principle is about how taxes are raised and are spent, therefore equality in its collection must be a critical national concern for all public sector workers and society as a whole.
However multinational companies happen to be the worse culprits who dodge millions of taxes every year, acting as giants corporate parasites on the countries they operate in, sucking profits out and leaving the rest of society to pay the price.
He also noted that most citizens fall outside the tax net thereby leaving the few formal sector workers to shoulder the entire tax burden to raise revenue for development.
The tax system should contribute to delivering and expanding quality public services like healthcare, education, utilities, roads, sanitation, physical and social infrastructure, redistributing income and wealth to tackle poverty and inequality.
Taxation, he said could do a huge number of positive things in any society, therefore it is vital that trade unions are able to articulate an alternative model of a tax system which was progressive.
Mr Asante-Krobea said discussions at the conference would help in establishing a unified tax justice system for the country.