Ghana loses about $2billion in taxes due to undervaluation of gold exports, a research conducted by a collaboration that includes the Institute for Statistical, Social, and Economic Research (ISSER) has revealed.
Between 2011 and 2017, Ghana’s exports were undervalued by an estimated $8.3billion, according to a study covering three political regimes.
The research focused mostly on commodities such as cocoa and gold, according to the group, because “these are two of Ghana’s key exports.”
ISSER and its collaborators, notably the Graduate Institute of Geneva, conducted the research as part of the Swiss Programme for Research on Global Issues for Development-funded Curbing Illicit Financial Flows (IFFs) research project.
Data presentation
Dr. Ama Ahene-Cudjoe, Senior Economic Researcher at ISSER and a member of the research team, presented specifics of the study, stating that the project used an innovative way to collect data from the Ghana Revenue Authority and other government organisations.
“We estimated that gold was abnormally undervalued at about $8.3 billion at constant prices and the base year is 2011. Our study was between 2011 and 2017. And in current prices, this is about $3.8 billion and this constitutes approximately 11 percent of the total value of gold exported during this period,” she said.
“The top five destination countries of these undervalued gold exports include major gold refining destinations, India, South Africa, United Arab Emirates, Switzerland and Portugal. This represented major gold refining, trading and manufacturing destinations,” she added.
When you consider that gold accounts for the majority of Ghana’s mineral exports, Dr. Ahene-Cudjoe believes the disclosure concerning tax and revenue losses owing to IFFs is crucial.
“In 2017, gold accounted for 96.4 percent of total earnings from mineral exports from Ghana,” she said.
Hope for the future
Fred Djanku, a senior research fellow at ISSER, is optimistic that if measures are taken to decrease trade-related illicit financial flows, the government will be able to earn revenue to fund its major flagship programmes.
“So, between 2011 and 2017, we realised that about GHC7.8 billion is undervalued every year. Now if you take about 25 percent of that which is the taxes that could have accrued to Ghana, that is about GHC1.8 billion a year. Now we are talking about E-Levy which the government trying to get more revenue,” he said.
“What it means is that if we are able to reduce this trade-related illicit financial flows by strengthening the governance systems, the data management systems and the policy and regulatory environment, what it means is that we can get more taxes from these resources than we are getting now,” he added.
“Government can then raise more revenues to be able to finance all the projects we know we have a huge infrastructure gap that we need to fill. We have flagship programmes that Ghana has to finance, so we are arguing that this is one of the ways by which we can raise more revenue,” he pointed out.
Mr Djanku continued, “this whole agitation of e-levy and all these taxes can come down if we are able to raise more revenue through other channels.”
The group intends to engage stakeholders, government institutions and the private sector to discuss how their findings can be incorporated into policies and more importantly how to implement these policies.
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