|Oil receipt for 2012 did not include a pesewa of the projected GHC384.11 million as corporate income tax; the 2013 budget statement has shown – reviving the debate as to why government continues to make projections in that regard, and when the country is likely to begin earning from the same.
The fact that the country did not ‘home’ projected corporate taxes and the shortfall in production targets resulted in a shortfall of GHC97.71million to the Annual Budget Funding Amount (ABFA), GHC614.55million. This means a total amount of GHC516.83 million was allocated to the ABFA.
The budget, meanwhile, made another corporate tax projection of GHC107, 812,193 for 2013 (the third time in a row), but was silent on why oil firms were not pressed to pay corporate taxes for 2011 and 2012 and when the taxes are likely to accrue the state.
In its mid-year report for January to June 2012, the Public Interest and Accountability Committee (PIAC) expressed reservations about the projections, saying: “the concern about over-estimation, reflected in the disparities between revenue forecasts and actual receipts, was not addressed in 2012 as petroleum receipts in the first half of 2012 showed that revenue targets for the year might not be meet.”
Commenting on the matter when the report was released, the committee’s chairman, Major (Rtd.) Ablorh Quarcoo, told the B&FT that the committee was not sure why government continues to include corporate taxes in its revenue projections.
“This is one of the things that continue to baffle us. We have pointed this thing out to the Ministry of Finance not once, not twice, but about four times already.
In a letter to the ministry last year after the budget we pointed it out – and then they came back to say no, they were not wrong.”
The PIAC’s concern is that the situation could limit transfer to the Ghana Petroleum Funds and lead to premature dependence on the stabilisation fund when the projected amounts are not realised.
Oil firms appear to be making the most of a capital cost recovery provision in the Petroleum Income Tax Law 1987 (PNDC law 188), which allows the oil companies to charge exploration and development costs to their revenues before arriving at the taxable profit.
In 2011, government projected to receive GHC 1.2 billion from oil including corporate taxes of about GHC600million – representing a shortfall of GHC583million.