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Ghana: Govt Asked to Stop Revenue Loss Through Tax Laws Review

Tax Justice Network (TJN), a tax advocacy group aimed at promoting transparency in international finance and opposes tax secrecy, has called on government to review laws on tax exemptions in the extractive industry to halt the continual annual revenue loss.

This, the TJN believes, if done will enable government to generate adequate revenue to address some of the difficulties facing the health sector such as congestion in the various government health facilities.

In addition, it called for building the knowledge capacity of government Tax Auditors through training programmes for them to be abreast of the current global modern tax auditing practices.

These suggestions were made at a training programme organized by Christian Aid for trainers in tax justice in Accra last Wednesday. Participants were drawn from Ghana, Kenya, Sierra Leone, Nigeria and South Africa.

It was observed that attracting investments has become very competitive among the developing world.

This competition for investment has arguably been most intense in least developed countries and the investments come at a greater cost, hence countries seek ways to lower local costs of production, including tax reliefs.

The general rationale for such policies has been that, in the presence of major competition for highly mobile investment, small improvements in the costs of doing business and the potential profits to be reaped may shift the location of the investment.

In fact, in an environment in which many nations are offering investment incentives, there is a belief that an individual nation that refuses to offer incentives may be deprived of significant amounts of investment.

This process has been termed ?tax competition? and has increasingly been acknowledged as a driving force in the proliferation of investment incentives and in the general lowering of corporate tax rates.

The belief is that investment incentives should be used to correct market failures. Specifically, if certain types of industries create significant positive externalities for the domestic economy, then countries will be justified in providing incentives to encourage these activities.

Thus, for example, incentives for relatively high-tech industries may be justified on the grounds that such industries create significant spillovers through skill and knowledge transfer. Likewise, when investor confidence has become unduly eroded, investment incentives may be an effective means to signal the investment friendliness of the destination country.

Date Updated: 23 January 2012 - Source:

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