By Nana Kwasi Gyan-Apenteng
Accra, Ghana//-Nobody likes to pay tax. This is not only in Ghana but it appears that we carry the phenomenon to extremes.
In the recent budget statement which has generated so much heat, the Minister of Finance, Ken Ofori-Atta explained that less than ten percent of Ghana’s population pays direct income tax.
He revealed that fewer than 50,000 companies pay corporate taxes in an economy founded on the principle of the “private sector as the engine of growth”.
The Minister put these figures out to justify the imposition of new taxes, including the E-Levy because, to put it crudely, the government is broke and needs to take even unpopular measures to ensure that we do not return to the bad old days of IMF bondage.
In the absence of enough sources of direct taxation the government has to resort to indirect taxes such as the E-Levy, petroleum products taxes and other tax buildup in the cost of services and goods. Income tax is based on how much payers earn and therefore tends to be fairer and more just.
Indirect taxation is inherently retrogressive and unreliable as an estimate of money that will accrue to the government’s chest.
It is for this reason that governments’ first line of revenue mobilization is to widen the income tax net by identifying companies whose employees must pay income tax and which are themselves liable to corporate income tax.
In Ghana, there is one line of business, which is so obviously lucrative but excluded from paying tax. This is the business of religion which is widespread across the country.
The religious sector is not only widespread, it must be one of the biggest employers as well as fastest growing business categories in Ghana.
It is for this reason that some people have argued for years that perhaps, the government could plug its income hole by paying more attention to that sector.
In Ghana, the argument for taxing churches, mosques, synagogues, temples and the like, is easy to make. In most communities in the country, the most prominent building you would find is probably a religious one, especially Christian churches.
Today, churches strive to outdo one another in the display of wealth and opulence. Many of them own huge parcels of land in choice areas of urban and peri-urban areas and their leaders lead flamboyant lifestyles, driving the latest and most luxurious cars.
Of course, we cannot say every church leader is rich and there is no record or estimate of money taken in by religious organisations but it must run into many billions of cedis every year.
However, the issue is not as simple as that. Writing in the Tax Foundation Newsletter, Jared Walczak put it this way: “Churches, synagogues, and mosques are, by definition, nonprofit entities, and nonprofits are not taxed on their net income (as for-profit entities are) for a rather simple reason: they don’t have net income.
While a church may have income in excess of expenditures in any given year, it has no owners or shareholders to benefit from increases in the value of the entity, to receive dividends, or otherwise to profit from the church’s income stream”.
It is the nonprofit status of churches that insulate them from the tax collectors attentions; however, that only applies to the churches as entities.
Churches have nonprofit status in the same way as many Non-Governmental Organisations and community based organisations do. They all don’t have owners or shareholders who share any “profits” they make.
In fact, technically, they cannot make a profit or share any dividend to the owners. They are all presumed to be doing work on behalf of people, good causes or communities.
However, people employed by churches, such as pastors, ministers, imams, etc. who are paid salaries must pay tax on their income tax.
It is relatively easier to estimate the income and tax liabilities of employees or “agents” of religious organisations which keep proper records and accounts.
How does the tax collector deal with the churches usually described as “one man churches” which are obviously owned and controlled by the founders and their families?
While the case for exempting churches that are properly registered and keep proper accounts can be sustained, the tax authorities must go after those who are either under-declaring the money they make from their congregation or not reporting at all.
The time has come to have a proper national and adult debate about this issue. We must render unto Caesar what belongs to Caesar.
“Caesar” has a lot to collect. Firstly, the number of people deriving their income from religious establishments must run into hundreds of thousands, so taxes from their incomes, if properly identified and collected must be more than a tidy sum.
Secondly, many, if not most of these people flaunt their wealth in a way that must give tax collectors an idea of where and how such monies can be collected.
So, while the debate about taxes churches continues, there is no doubt that tax collectors must learn a trick or two from the very people who have perfected the art of collecting money even from those the government considers too poor to pay taxes.
By Nana Kwasi Gyan-Apenteng
This article was first published in the Mirror
