Ghana’s energy crisis to impede 2013 domestic revenue mobilization

Ghana’s domestic revenue mobilization in 2013 would be challenged by the energy crisis currently being experienced by the country.

The tax paying ability of businesses would be negatively impacted by the poor power supply which is negatively affecting production and profit levels.

The concern is collectively shared by Finance and Economic Planning Minister, Seth Terkper and the Commissioner-General of the Ghana Revenue Authority (GRA), George Blankson.

They however expect management and staff of the GRA to defy the challenging environment to “dig deep into your reservoir of experience and knowhow of the tax environment to deliver the goods”.

The GRA exceeded its 2012 target by 2.6 percent, collecting total revenue of Gh₵11.7million, a record 34.70 percent rise over the previous year’s figure.

The revenue collection target for 2013 is Gh₵15.6million. To meet the set target, the Authority has been tasked to devise innovative ways of getting majority of players in the informal sector on board the taxpaying vehicle, whilst plugging loopholes to prevent leakages in the tax system.

An estimated 1.5 million Ghanaians pay direct taxes and only five percent of this taxpaying population is in the informal sector.

The Finance Minister says the situation is unacceptable and wants the GRA to double efforts to rope in potential taxpayers from the informal sector.

“Our compatriots in the informal sector continue to be the worst offenders when it comes to tax evasion even though we all agree that the sector controls about 7-percent of the economy; it is therefore pertinent that practical measures are put in place to curb this problem”, stated Mr. Terpker.

According to him, a major performance judgment of the GRA would be its success in increasing the percentage of informal sector taxpayers from the present five percent to double digits.

Commissioner-General of the GRA is confident the roll out of the Medium and Small Taxpayer Offices in the regions this year would help rope in majority of the informal businesses.

“The small taxpayers are normally taxpayers in the informal sector; how to identify them and bring them into the tax net, especially those that have been operating outside the radar of the tax authority, require special skills which the tax officers of the Small Taxpayer Offices would be specially trained to carry out”, Mr. Blankson told LuvBiz Report.

Board Chair of the GRA, Ernest Kwesie, says collaborations with the government would be intensified to equip staff with needed logistics, resources and motivation to work better.

The GRA has been holding its 2013 Management Retreat in Kumasi on the theme: “Implementation of the GRA 3-Year Modernization Plan (2012-2014): Accomplishments, Challenges and Interventions for the Way Forward”.

The Authority is taking a critical look at performance, three years into the establishment of the GRA and two years into the implementation of the strategic and modernization plans as well as the blueprint for the revenue administration reform agenda.

Story by Kofi Adu Domfeh

Power to produce crippled by endemic energy crises

Yaw Opoku is a local footwear producer in the Bantama suburb of Kumasi. He engages five other hands at his production shed, in the quest to meet demands of customers.

The more they produce, the higher they earn to feed themselves and their dependents. But their dependence on electricity to complete the production cycle is on the decline.

Today, Yaw and his partners cannot plan their production schedule and they are worried about their future livelihoods.

“As I speak to you now the lights are off”, Yaw complained. “We’re sitting here hoping it will be on for us to resume work. I used to go on trek every week to sell my footwear but now I go when I’ve managed to produce enough”.

These footwear producers are not alone in feeling the heat from Ghana’s inability to produce enough electricity to feed domestic, commercial and industrial consumers – from the service industry to manufacturers, the impact of the power cuts is deeply felt.

The challenges to domestic users are enormous, especially the damage caused to electrical appliances from the power fluctuations.

But manufacturers are most worried. Worst hit are the small-scale businesses, including dealers in frozen products, wielding mechanics, drinking bar operators, beauticians and dressmakers who are constrained in resorting to power generators as alternatives.

In times past, Kumasi’s industrial sector was centered in the Kaase and Ahinsan areas, where the timber firms were concentrated.

This is not the situation today as industries are now scattered across the region. Hence, any planned load shedding targeting industries will not be beneficial.

Producers are therefore finding it difficult to plan production as power goes off sometime unannounced.

The general concern among businesses and industrialists is the rising cost of production. The erratic supply of electricity does not only disrupt production but people have to invest in fuel and maintenance to run their generators.

Now the prices of petroleum products have gone up, which according to the National Petroleum Authority (NPA), are influenced by the government’s decision to withdraw subsidies on the products.

The Volta River Authority (VRA) and the Electricity Company of Ghana (ECG) have also called for hikes in electricity tariffs if they are to boost their capacity to deliver on the country’s energy needs.

According to local manufacturers, a persisting energy challenge would push production levels low and eventually result in layoff of workforce.

They therefore expect government to protect them against cheap imports if they are to absorb the impact of hikes in the prices of petroleum products on productivity.

 

The producers say though the volatile oil market could adversely affect their operation, the major threat is cheap and imitated imports competing with local products.

Story by Kofi Adu Domfeh