Business News of 2014-07-02

Civil servants cry out as Black Stars players, officials, celebrities escape tax net

Civil servants have expressed outrage at the persistent refusal of the Ghana Revenue Authority (GRA) and the government to leave the bonuses and appearance fees of players of the country’s senior national football team, the Black Stars, out of the tax net.

They are even more furious about the inability of the state revenue authority to also demand taxes from the allowances of the large contingent of technical handlers made up of persons from the Ghana Football Association (GFA), government officials, celebrities who served as ambassadors among many others who benefitted from the huge sums of money issued by the government as part of expences for the on-going World Cup tournament in Brazil.

According to them, once all incomes, including what they described as their “meager allowances and salaries” are taxed on a monthly basis, there is no justification why the GRA, which has over the last few years, not been able to raise enough revenue for the state, will not target the bonuses of the Black Stars.

They said the Black Stars players earned a lot from their trade and must not be allowed to escape the tax net, particularly at this time when the country is in dire need of cash to continue with the many development projects which are lagging behind.

The government last week airlifted US$3million in cash under police escort to the Black Stars team in Brazil to enable the officials to dole out USS100,000 each to the 23 players as appearance fee without deducting the necessary statutory taxes.

There are reports that the tax authorities in Brazil have been proactive and have demanded that the players and their technical handlers pay 17 per cent tax on their earnings as per the state law.

The move by the government to airlift the money to the team in Brazil also volitaes the Bank of Ghana directives which prevents the transfer of more than US$10,000 from the country.

The players nearly held the country to ransom after they had insisted on being paid physical cash as their appearance fee in camp prior to their match with the Portuguese in which they lost by 2-1.

Earlier before their departure to Brazil, the then Sports Minister, Mr Elvis Afriyie Ankrah, had told Ghanaians at a news conference that the players were to be paid an amount of US$75,000 through their bank accounts at uniBank, the official bank of the team, but due to lack of clear leadership and focus, that could not happen and the players had to insist on taking US100,000 in cash.

Speaking on an Acra based radio station last Saturday, Mr Randy Abbey, a member of the GFA, stated that since 2010, the GRA and the GFA have been in inconclusive meetings to see how best the players and their technical handlers could be taxed.

The irony about the discussions is that, the GRA does not engage any income earning person in the country before deducting taxes from their salaries or allownaces. They do so on grounds of law and it is not negotiable.

Mr Abbey admitted that, for many years now, the players and their technical handlers carry cash to the various places where the Black Stars are engaged in any tournament and the players are paid cash.

Mr Michael Quartson, who did not want to mention his work place, in an interview with the GRAPHIC BUSINESS, said he did not understand why the players should not be taxed.

He said the tax policy stated that every individual, who is working and receives a salary, should be taxed and since the players were also working and being paid, they should be taxed just as anybody else.

Another civil servant, Mr Jonathan Owusu, also said it was very unfair on the part of the government to leave out the players who made huge sums of money abroad but rather taxed the ordinary Ghanaian whose salary “is not even adequate enough to take care of him and family to pay bonuses of those who are already rich”.

Another civil servant with the Accra Metropolitan Assembly (AMA), who pleaded anonymity, said considering the economic hardships in the country, she was very surprised the government could doll out such amounts to the players without taxing it.

She believed the government and Ghanaians had over pampered the players and, therefore, it was about time the government stopped prioritising football over the challenges facing the economy.

She said taxation from the US$3 million dollars could have at least resolved the issue between the government and the Polytechnic Teachers Association of Ghana (POTAG) to enable them to return to the classrooms.

Others wondered why the Black Stars players and their officials should be given preferential treatment as far as taxes were concerned when they represented the country in any international tournament.

To them, the players, who ply their trade in other foreign countries, were heavily taxed because those countries understood the value of taxes and asked why the government and the GRA would sit aloof when they had an easy way to tax the players.

GRA mute

When contacted, no official from the public affairs department of the GRA could explain why the Black Stars appearance fee, allowances of the technical team among the many others who benefitted from the funds released by the government for the World Cup, could not be taxed.

The reporter was tossed around from one office to the other as officials shied away from making comments about the development.

The GRA?has sat aloof for Brazil to benefit from what the state could have taken to help address some challenges confronting the state.

Widening the tax net

Presenting the 2014 Budget statement to Parliament last November, the Minister of Finance and Economic Planning, Mr Seth Tekper, forcefully advanced arguments to support the need to extend the tax net to include many businesses that were making huge profits but which operated outside the tax net.

Consequently, for the first time, manufacturers of pharmaceuticals, auctioneers, estate developers and operators of financial services were captured under the tax net.

Unfortunately, the bonuses and supposed appearance fee of the Black Stars players continue to escape the tax net.

A tax expert and Tax Policy Adviser to the Ministry of Finance, Dr Edward Larbi Siaw, recently revealed that only two million out of the eligible six million taxpayers were found in the tax net.

He wondered how a population of 25 million should have only two million people paying taxes.

He said the country could not continue to increase tax rates for those in the tax net and leave out others.

It is clear from the behaviour of the government and the GRA that they have no clue to widening the tax net except to overburden those already in the tax net.