Ghana incurs a yearly loss of $1.4 billion due to illicit financial flows, primarily from tax evasion and systemic inefficiencies as reported by the Tax Justice Network Africa. Multinational corporations exacerbate this issue, leading to severe impacts on national revenue, public services, and overall economic stability. These financial outflows highlight broader challenges faced by African nations, necessitating urgent reforms in tax policy and enforcement mechanisms to retain economic wealth.
Ghana experiences a staggering loss of approximately $1.4 billion yearly due to illicit financial flows, hindering its development resources. The Tax Justice Network Africa (TJNA) attributes these losses to tax evasion, extensive tax exemptions, and inefficiencies within the tax system, which heavily impact national revenue.
During an African Parliamentary Network summit on Illicit Financial Flows and Taxation in Ghana, experts discussed the detrimental effects of these financial outflows on the continent’s economic growth. Francis Kairu, the Strategic Programmes Director at TJNA, emphasized the role of multinational corporations and weak enforcement in exacerbating revenue losses.
“Our governments must also acknowledge that the problem is a major issue, and I think the biggest challenge in our generation now is the issue of illicit financial flow,” stated Kairu. He pointed out that Ghana, rich in natural resources and a significant population, faces substantial losses to foreign multinationals involved in tax avoidance practices.
The United Nations Conference on Trade and Development (UNCTAD) highlights that Africa loses nearly $89 billion each year to illicit financial flows, with the continent paradoxically classified as a “net creditor to the world.” This highlights the irony of Africa’s reliance on foreign aid while simultaneously suffering extensive capital flight.
Experts argue that illicit financial flows are largely driven by companies under-declaring the value of exported commodities such as gold and diamonds. Additionally, there are accusations of businesses falsifying financial records, mispricing goods, and utilizing transfer pricing to shift profits to jurisdictions with lower tax rates.
These illicit outflows severely impact Ghana, resulting in rising national debt and budget deficits that restrict funding for essential services such as education, healthcare, and infrastructure. Stakeholders urge policymakers to implement stronger tax regulations and more effective enforcement to reclaim revenue lost to illicit flows.
Combating illicit financial flows is not merely an economic concern but a matter of national sovereignty, sustained development, and financial justice. However, a critical question remains: how much longer can Ghana tolerate these losses before actionable reforms are enacted?
In summary, Ghana’s enduring financial struggle, characterized by a loss of $1.4 billion annually due to illicit financial flows, underscores the urgent need for comprehensive reforms in tax policy. The underlying causes of tax evasion and systemic inefficiencies must be addressed to enhance revenue retention. The continuity of these losses threatens essential services and the overall economic stability of Ghana, highlighting the significance of stronger regulations and enforcement against illicit financial activities.
Original Source: www.ghanaweb.com
