Mr Gabby Asare Otchere-Darko, nephew to President Nana Akufo-Addo says he is “yet to hear any arithmetically convincing argument against this revenue enhancing expectation [of Kelni-GVG]’ from the IMANI Boss, Franklin Cudjoe his persistent stands that the $89 million Kelni GVG contract with Ministry of Communication should be abrogated.
This for him “is problematic for me and not good enough”.
Read his full letter:
Franklin, I am yet to hear any arithmetically convincing argument against this revenue enhancing expectation [of Kelni-GVG] So, to link the cost of Kelni-GVG solution to the cost of hospital beds and completely ignore the cost of undeclared incomes from Telcos to the exchequer is problematic for me and not good enough. Franklin, please let’s do better than populism. Unless, you want Ghanaians to believe that Telcos are sincere in what they have been declaring to the state all these years and there is nothing to gain from this exercise. Somehow, I don’t believe you believe so.
Franklin Cudjoe: The point is not to insist that the telcos are saints. The point is that a risk assessment should have been commissioned to ascertain the degree of tax evasion going on in order to determine how much would be justifiable to spend trying to uncover wrongdoing. There is no point throwing away hard-earned tax money after phantom projects that don’t generate any additional income. In fact, we know for sure that since 2007 to date, no monitoring that has been done has been shown to raise revenue.
The amounts that are being bandied around as mobile money related tax revenue that the monitoring is supposed to come and protect is sheer nonsense. MTN makes more than 90% of revenue in the mobile money sector. Last year it made about $108 million. If government takes even 6% of that in taxes, as it does with voice revenues, we are talking of less than $8 million per year. There is a lot of pure confusion about what really is happening in the telco sector.
The telecom industry generates less than 3% of Ghana’s GDP (money) but they pay roughly 35% of all corporate taxes in the country. If they are hiding money then other industries are hiding far more.
If so, why do we spend $125 million through the Ghana Revenue Authority (GRA) to collect, monitor, and assure all the $7.5 billion we collect, and around $25 million to collect, monitor and assure all the $1.23 billion we collect in taxes from companies in Ghana, but want to burn nearly 40 cedis in every 100 cedis we collect in communications services tax? What is the logic?
If we run a KelniGVG type monitoring system, at a similar cost, for all industries in Ghana, we would be spending $3 billion yearly just to monitor taxes. The country would literally collapse.
Why should we trust KelniGVG, with all its obscurity or its foreign sponsor, GVG, with its scandals all over the place (troubles in Tanzania, Uganda, Liberia etc.) to monitor MTN, a listed company with much more to lose if they lie and are caught?
But even if we really wanted to prevent the telcos from cheating on taxes, all we need to do is collect the CDRs, which are like “bank statements” but with telephony rather then banking transaction records. Once we have the CDRs we can use a system that generates random calls to check if those calls appear in the CDRs. IMANI has described such a system, specified it, and cross-checked it with telecom engineers publicly on Facebook. The cost is $55,000. This actually does catch fraud if there is any.
Many companies in Ghana are monitored for tax compliance using standard approaches like site visits (GRA and NCA can go to the telcos unannounced and supervise retrieval of CDRs intermittently, for instance), bank statement (every money the telcos make go into their bank statements) reconciliations etc. No one is saying tax assurance isn’t a good thing. That would be a false claim. But tax assurance is something that every company is expected to go through anyway. We only object to this by-force approach of asserting without evidence that the telcos are special kinds of thieves that warrant some special gadgetry to monitor their tax compliance, when we are already paying all manner of technical agencies to just do their work.
Why is that in the oil and gas sector we manage our own flow meters at a cost of 1% of what we want to use to monitor telcos even though the revenue at stake that can be measured through monitoring is more than 8 times what we are dealing with as far as communications service tax is concerned. ‘
80% of the telcos’ revenues cannot be monitored at all through this KelniGVG method as they are EBITDA revenues. We monitor that through the standard GRA process. Why should we be satisfied monitoring 80% of the revenues in the standard way and yet we want to pay $178 million over 10 years on the 20%.
Please let me know if you need further help in understanding the arithmetic. I will be waiting
Source: AwakeAfrica.com | Efo Korsi Senyo