I am embarrassed by errors in my tax exemption report, I apologise- finance committee chairman

The Chairman of Parliament’s Finance Committee, Kwaku Kwarteng, says he feels embarrassed by what he described as an error in one of the committee’s reports which designated a hotel as a beneficiary of One District, One Factory project and granted it nearly $ 4 million in tax exemptions.  

In an interview on Joy FM on Thursday, August 24, 2023, the Member of Parliament for Obuasi West blamed the parliamentary clerks.

“As a Chairman, I am embarrassed by this. In the report, we reference 1D1F. That is what is misleading some people, and it is coming from the fact that you know, the way our clerks prepare the report especially when the workload is big is not to start every report’s preparation of a report from scratch. They take a similar report and then they change the information that is related to the old report with information from the new referral. So, when the workload is big, sometimes you miss some of these references and then they remain in the report,” Mr. Kwarteng explained.

Mr Kwarteng’s apology follows The Fourth Estate investigation which revealed how Parliament granted 4-Mac Limited, a local company, almost $4 million tax exemption to facilitate the construction of a four-star hotel, Le Meridien, at the Airport Residential Area in Accra.

According to him, the exemption was granted under the Ghana Investment Promotion Act and not under the 1D1F as the Finance Committee report dated November 25, 2022, stated.

It is for this reason that the Member of Parliament for Obuasi said The Fourth Estate‘s conclusion that the tax waiver was granted under the One District, One Factory was an error.

“We are happy to accept the fault that there was an error in our report, but we do not think that that error is sufficient basis to come to the conclusion that The Fourth Estate came to,” the Member of Parliament said.

He also admitted that the minority caucus which is expected to play a watchdog role to the government failed to play its role.

“If it is not a controversial matter, the ranking member does not really bother to go around to check errors like this. I mean we are all learning, and going forward we will be more meticulous in reviewing these reports,” the Finance Committee Chairperson noted.

According to Mr. Kwarteng, the Committee was clear that the recommendation for the company to be granted a tax waiver is a strategic investment and not under the government’s One District One Factory.

“It is not just a matter of public policy, it is embarrassing, a reputational matter. If I can sit on a referral and say that a hotel is a factory and therefore has to be given exemptions meant for factories, it really hurts my feelings and I just want The Fourth Estate and the media to review all the documents.”

When asked if the error in the finance committee’s report had been corrected, Mr Kwarteng said that the error was insignificant.

“Because it was not a critical part of the report, the report essentially reviews the figure, and the tax lines are clear. This was the literature and the narrative around the report. It is possible. If we want to, we can go to parliament when Parliament resumes, that we expunge those references to 1D1F from the report. We can do that. It may not be that necessary but if we have to, we can do that”, he added.

The Fourth Estate’s response 

A senior reporter at The Fourth Estate, Seth J. Bokpe, who was also interviewed on the programme, however, pointed to the lawmaker that he could not blame the said error on The Fourth Estate since documents referred to in the story were all products of Parliament.

“Parliament is a house of records. If we cannot depend on documents emanating from the House, what can we call official? Every single reference we made in that story was from parliamentary documents,” he said.

He urged the MP to rather apologise for the “so-called errors.” Mr Kwarteng did apologise to The Fourth Estate for the comment. 

“I apologise, I am sorry this error appeared in our report,” he added.

Mr. Kwarteng had earlier released a rejoinder claiming that The Fourth Estate publication on a $ 4 million tax waiver granted 4-Mac Limited for constructing a hotel under the One District, One Factory initiative was false.

“Please refer to the publication by Victoria Enyonam Adonu captioned as above and dated 21 August 2023 in The Fourth Estate. The publication claimed that the Ministry of Finance had requested, and Parliament had granted tax exemption under a one-district-one-factory programme for the construction of a hotel. This claim is false”, the rejoinder by the chairman of the finance committee chairman wrote.

In The Fourth Estate’s publication, reference was made to Parliament’s Finance Committee report which is an official document of reference on deliberations made at the committee level before they are presented to Parliament for approval.

The same Finance Committee report was submitted and adopted by 243 Members of Parliament on December 7, 2022.

In putting together this report, The Fourth Estate reached out to Mr Kwarteng who declined to speak to the subject.

The Fourth Estate also reached out to Cassiel Ato Forson, a ranking member of the finance committee in parliament, at the time, for his comment but he did not respond.

Similarly, the ranking member of the finance committee and then member of the finance committee, Isaac Adongo, did not respond to messages from The Fourth Estate.

The Fourth Estate followed up with calls to a deputy minister for finance, Dr John Kumah, on August 15, 2023, but got no response.

However, he reacted to a text and WhatsApp messages saying “Please, kindly write formally to the minister so the specific schedule officer may assist with the appropriate response. I don’t handle that schedule, thanks.”

That letter was submitted to the Ministry of Finance on Wednesday, August 16, 2023, but there has since been no response.

The Finance Committee report on the request for tax waiver states: “As part of the Government’s industrialization agenda, the Ministry of Trade and Industry is facilitating the establishment of industries across the country under the One District One Factory Program.

“As part of the program the Government intends to extend tax incentives to a number of factories that seek to partner government in its industrialization drive. To this end, the Government intends to grant tax reliefs for the establishment of the Le Meridien Hotel, a hospitality facility in the Greater Accra Region.”

Background

In December 2022, Parliament granted a US$4 million tax waiver under the One District (1D1F), One Factory programme to 4-Mac Limited, a company that is building the Le Meridien hotel at Airport Residential in Accra.

The waiver is to cover import bills and other import-related taxes of the company. The company also received a five-year tax holiday.

The parliamentary approval followed a request from the Ministry of Finance dated July 25, 2022. The ministry initially sought approval for almost US$6.4 million in import tax relief for the construction of the four-star, Le Meridien hotel.  The 160-room hotel is expected to open its doors to customers in 2025.

This tax exemption was packaged under the government’s flagship industrialisation policy, ‘One District, One Factory’. The committee in its report to the House dated November 25, 2022, recommended that the request be approved, but it reduced the amount from US$6,389,428 to US$3,919,628.

“That this Honourable House adopts the report of the Finance Committee on the Request for waiver of Import Duties, Import VAT, GETFund Levy, NHIL, EXIM Levy and Domestic VAT amounting to the Ghana Cedi equivalent of Three Million, Nine Hundred and Nineteen Thousand, Six Hundred and Twenty-Eight United States Dollars (US$3,919,628) on materials and equipment to be procured for the development of the Meridien Hotel by 4-Mac Limited.”