June 13, 2024
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Govt Owes Pension Schemes GH¢2.6 Billion ~ Finance Minister Reveals

The Minister of State at the Ministry of Finance, Dr Mohammed Amin Adam, has revealed that government’s indebtedness to various pension schemes at the end of May 2023 is GH¢2.63 billion.

The amount comprise of Tier 1 of the Controller and Accountant General’s Department mechanised payroll, GH¢1.62 billion, Tier 1 of subverted institutions, GH¢188.59 million, Tier 2 of mechanised payroll, GH¢808.21 million and Tier 2 of subvented institutions GH¢6.1million.

“Mr Speaker, the government paid GH¢2.67 billion to various pension schemes in 2022. Between January and the end of May, 2023, the government had also paid GH¢2.26 billion,” Dr Adam said on the floor of Parliament in Accra yesterday.

This was contained in an answer to a question asked of the Finance Minister, Ken Ofori-Atta, by MP for Tamale South, Haruna Iddrisu.

Mr Iddrisu, a former Minori­ty Leader, wanted to know how much government owed pension schemes, including the Social Secu­rity and National Insurance Trust (SSNIT) by the government.

In a follow-up question by the NDC Member for Bongo, Edward Bawa, if pension savings have been released on time and invested, Mr Adams said he readily did not have the answer.

“I will get the answers and re­port back to the House,” he said.

Dr Adam also responded to a question related to a 24-month US$18.24 million revenue mobili­sation contract between McKinsey & Company Inc and the Ghana Revenue Authority.

The contract was for McKinsey to support GRA to increase tax revenues over the baseline of 17 per cent year-on-year growth and other interventions to increase effi­ciency and effective work culture.

Responding to the question asked by the Member for Tama­le North, Alhasan Suhuyini, Dr Adam, MP, Karaga said despite the contract, revenue mobilisation continue to be one of govern­ment’s challenge and that Ghana’s tax-to gross domestic product ratio averaged 13 per cent, compared to the 18 per cent average in the sub-region.

The target, Dr Adam said was exceeded and that the total revenue growth recorded was 28 per cent year-on-year.

“Mr Speaker, GRA’s total payment to McKinsey over the contract period of 2018-2022 was $12.2million.

“In terms of performance, the collaboration between GRA and McKinsey resulted in an increase in revenue from GH¢38 billion in 2018 to GH¢75.5 billion in 2022, a cumulative average of about 19 per cent over the period,” he said.

Apart from McKinsey helping government increase its revenue, it helped to lead a cultural shift and professionalism in revenue mobilisation.

“Mr Speaker, despite these very good results, and Ghana’s current tax-to-GDP ratio rising from 12.1 per cent in 2016 to 13.8 per cent as at end 2022, our revenue perfor­mance is still one of the lowest in the sub-region.

“For context, our peer countries are collecting an average of 18 per cent while Organisation for Eco­nomic Co-operation and Develop­ment countries are achieving about 34 per cent,” he said.

Ghana, he said, has the capacity to double its tax revenue, and at the very minimum, “be at par with its peers without introducing new taxes”.

As a result, he said govern­ment was leveraging digitalisation, including initiatives such as the E-invoicing, E-VAT, E-Levy, Gha­na.gov among others to expand the tax net, eliminate leakages and close the tax gap.

Story By Ghanaian Times

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