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07.04.2017 Feature Article

Are Ghana's Political Elite Entitled To Tax-Free Income?

Are Ghana's Political Elite Entitled To Tax-Free Income?
LISTEN APR 7, 2017

There is a class-based tax injustice in Ghana, which makes the country's vaunted democratic orientation nothing but a sham. While the high and mighty in the society are allowed to take home every penny they earn, poor workers, from manual laborers to school teachers to nurses to office clerks, are obliged by law to forfeit a portion of their meager incomes to the tax authority each month. This situation is one of the worst examples of social injustice. It is a flagrant abuse of power by the political establishment.

Among the high earners in Ghana who don't pay tax on their incomes are the president, the vice president, cabinet ministers, parliamentarians, and supreme court judges. These are not what one might characterize as tax evaders in the traditional sense; nonetheless, they evade tax by taking advantage of a tax law written in their favor. The authors of the 1992 constitution, in their infinite wisdom, decided to grant the political elite exemption from paying tax on their huge incomes.

The harmful impact of this decision on the nation's coffers cannot be denied. It is estimated that Ghana's treasury loses more than 40 million GHS annually as a result of the tax exemptions. This impressive amount of money, which winds up in the pockets and bank accounts of individuals who might be considered affluent even by Western standards, could be used in diverse ways to help millions of ordinary Ghanaians. For example, it could be used to build more modern maternity units that would save the lives of thousands of mothers and their babies (A new building project for a maternity block at KATH has been abandoned for 43 years due to lack of funds!); it could provide decent buildings for children who still go to school under trees; and it could make life a little easier for the citizens in the rural communities which lack potable water by making it possible for them to be provided with this vital social amenity. Indeed, there is a whole laundry list of ways in which this potential tax revenue could be utilized to take care of the myriad infrastructural needs of the country.

Public officials in a host of countries around the world don't enjoy the special privilege of tax exemption because paying tax on earnings is seen in these countries as a civic responsibility to be shared by all regardless of social standing. In these countries at the end of every fiscal year, presidents, prime ministers, cabinet ministers, MPs, congressmen/women, and supreme court judges along with ordinary citizens who are required to pay income tax all make a bee line, both literally and figuratively, to file their tax returns. And as far as I am aware, shouldering their fair share of the tax burden has not made American, British, German, or French public officials any less productive in their jobs. That is why I have such a hard time wrapping my mind around the notion that Ghana's public officials should be exempt from paying income tax.

Apart from the undemocratic nature of the tax exemption law, I think it is unconscionable for the upper reaches of the political class in Ghana to enjoy all the social and economic benefits made possible with taxpayers money without making any financial sacrifices of their own. It is simply not fair.

Kwadwo Kyei
Kwadwo Kyei, © 2017

The author has 18 publications published on Modern Ghana.Column: KwadwoKyei

Disclaimer: "The views/contents expressed in this article are the sole responsibility of the author(s) and do not necessarily reflect those of Modern Ghana. Modern Ghana will not be responsible or liable for any inaccurate or incorrect statements contained in this article."

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