Graphic Business News

Take property rate mandate from local authorities

By: Emmanuel Bruce and Daniel Ofosu Dwamena
Mr Yaw Osafo-Maafo — Senior Minister
Mr Yaw Osafo-Maafo — Senior Minister

The Senior Minister, Mr Yaw Osafo-Maafo has urged the government to take the mandate of property rate collection from local authorities and hand it over to the Ghana Revenue Authority (GRA).

He said the local authorities had so far failed in this mandate as the country raised just GH¢31 million from property rates last year, with Greater Accra, which has numerous high earning properties, recording just GH¢10.3 million, an amount he described as ‘embarrassingly low.’

Contributing to a panel discussion at the launch of the Regional Economic Outlook report of the International Monetary Fund (IMF), he said the local authorities did not have the technical knowhow to evaluate properties, hence the low collection.

He said the government should ,therefore, consider handing over collection to the Ghana Revenue Authority and give a percentage to the local authorities.

“We should look at who should be responsible for property rates in the country because the local authorities are not doing it well. It can be centralised with the GRA or an arm of the GRA, however, since the revenue is meant for the local authorities, a portion should go back to them,” he stated.

With Ghana being the most urbanised country in West Africa with 54 per cent of the population living in urban areas, he said the government should focus on property rates to rake in more domestic revenue.

Improving domestic revenue
Mr Osafo-Maafo said the country could improve its domestic revenue mobilisation without imposing additional taxes.

He said the country could improve its domestic revenue by plugging existing loopholes and straightening some of the tax rules and regulations.

“The problem we have in this country is that whenever we are looking for revenue, instead of plugging loopholes and identifying what we are losing, we tend to look for new areas to increase taxes,” he stated.

“We should look at the structure of the country and use that structure to improve domestic taxation. We need to improve domestic revenue so that we will be independent from outside support,” he added.

Technical assistance
The Senior Minister also called on the IMF to provide the country with technical assistance to effectively audit the mining, oil, telecommunication industries.

He said the country was being cheated by mining and oil and gas companies in terms of tax revenue due to the state’s inability to properly audit their operations.

“For the past years, we have not been earning anything from our 10 per cent carried over interest from the mining companies and this could be down to our inability to properly audit this complicated industry,” he stated.

Free zones concept
Mr Osafo-Maafo also called for the need to have a re look at the free zones system in the country as he believed the concept was a way of cheating and denying the country of substantive domestic revenue.

He said these free zones companies who are scattered all over the country are being showered with all kinds of tax exemptions because they are supposedly exporting 75 per cent of their goods but end up selling everything on the local market due to poor supervision.

“We have stand alone free zones companies operating in different parts of the country but free zones companies should be operating in a special and specific area where they can be controlled and supervised effectively,” he stated.

“We should avoid all these stand alone free zones. If we want free zones, we must demarcate a particular area where all the companies will operate there in order for the state to supervise their 75 per cent export,” he noted.

He ,therefore, advised the government to put the free zones concept on hold, while it works on ways to make it more effective.

“We are losing lot of money with this type of free zones concept and we should not continue it as it is now,” he explained.

“We need to put it on hold and provide specific areas for them to operate. After that, we can start it all over again,” he added.

Taxing of idle lands

The Senior Minister also urged the Ministry of Finance to consider taxing lands that were lying idle.

This, he said, would propel land owners to develop their lands and pay proper rate on their properties.

He said people intentionally buy these lands, refuse to develop them and later sell them at exorbitant prices when the area in which the land is located becomes more developed.

 “It is about time the country built a constituency for reforms based on effective revenue mobilisation to sustain domestic revenue to have a durable impact to improve governance and transparency, he said.” — GB