Government lost GHC8.8bn via gift tax in 2017 - ILAPI

Policy think tank, Institute of Liberty and Policy Innovation (ILAPI) has issued a document on the loss of revenue through gift tax. According ILAPI, Government lost GH 8.863 Billion via Gift Tax alone in 2017.

ILAPI stated that, the think tank sampled 6200 people nationwide and asked them simple questions as to whether they have received gifts from loved ones who are not directly related to them.

‘’By interacting with our participants, we collected data for this study through face-toface interviews and open ended questionnaires which were given to all participants and collected after they have answered them. Several questions were asked but the two relevant for this study were;

1. Are you aware of gift tax? And Have you ever paid gift tax on the gifts you receive? (YES or NO). Out of the categorization, religious leaders recorded a taxable gifts amounting to GH?157,893,705.00 and evaded gift tax of GH? 23,684,055.75 About 2000 ‘Special People’ responded as whether they were aware of gift tax and in their responses, 302 answered YES representing 15%; 1442 answered NO representing 72% whereas 256 responded somehow representing 13%.

On whether the respondents paid tax, only 20 out of the 2000 representing 1% answered YES. 95% representing a figure of 1890 said they never paid tax. Ninety (90) representing 5% said they somehow paid tax.

‘’The special people recorded taxable gifts of GH¢146,6 Apart from the persons who fall under the first two categories or group of persons, all the others are classified by this study as ordinary people. Regardless to their occupation, social or economic status, they are described by this study as ordinary people.

Be it police, truck pusher, organizer of an association or party, president of a group, accountant what so ever, they are called by this study as ordinary people • The study interviewed 3000 Ordinary People.91,600 and evaded tax of GH¢22,003,740,’’ the document added.

Out of the ‘Ordinary People’, 60 representing 2% said they paid tax whereas 2940 never paid gift tax representing 98%. ‘’The ordinary people received tax amounting to GH?61,785,656.00 for which they did not honor the gift tax and evaded gift tax of GH?9,267,848.40 • So, In 2017, Ghanaians exchanged taxable gifts amounting to GH?366,370,961.

As part of the gift amount, 15% were supposed to be paid as gift tax but the amount went off the government coffers unnoticed. So in 2017, government lost GH?54,955,644.15 as gift tax revenue on 6200 Respondents of OUR survey.’’ The gender structure of the respondents is as follows: Male: 2352 and Female: 3848making a total of 6200 respondents.

‘’For just a year with only 6200 people not paying gift tax ,produced an amount of GH?54,955,644.15,’’ the statement posited. According to ILAPI, ‘’ If 6200 people produced GH?54,955,644.15, then 1,000,000 people will produce GH? 8,863,813,572.58 (GH?8.863 Billion) using simple proportion. So with this analysis, ILAPI Ghana can say with authority that Ghana loses GH? 8,863,813,572.58 annually.

Ghana’s government budgeted GH? 1.6 billion for free SHS for a year so if we divide GH? 8,863,813,572.58 by GH? 1.6 billion a year gives 5.5 years. So ILAPI want to tell Ghanaians that if we should all honor our gift tax obligation, the revenue from gift tax alone a year could finance free SHS for approximately 6 years without OIL MONEY.

If the government is losing GH? 8,863,813,572.58 from gift tax revenue annually, then simple mathematics tells us that for every second, the government loses GH? 281.07’’. ILAPI is therefore making the following recommendations: Change of channel of payment; Building of trust by the government; Accessibility of gift tax return form; Proximity of tax offices and Avoidance of poor reception by tax officials.