Mr. Speaker, I beg to move, that this honourable House adopts the Report of the Finance Committee on the Request for Exemption of tax liability on equipment and materials to be imported or purchased locally, corporate and expatriate tax totaling €7,329,361.16 in respect of Koforidua Water Supply Expansion Project in the Eastern Region.
Mr. Speaker, in presenting your
introduction, the background, observations and recommendations and the conclusion and request that the Hansard captures the whole Report as having been read. Mr. Speaker, attached to the Report are appendices on the assessment of tax liability.
1.0 Introduction
The above tax waiver request was laid in the House on Wednesday, 14th February 2007 and referred to the Finance Committee for consideration and report in accordance with the 1992 Constitution and the Standing Orders of the House.
To consider the exemption, the Committee met with the Deputy Minister for Finance and Economic Planning, hon. Prof. George Gyan-Baffour, officials from the Ministry of Finance and Economic Planning and Ghana Water Company Limited and reports as follows:
2.0 Background
Hon. Members will recall that a loan Agreement between the Republic of Ghana and the KBC Bank of Belgium for an amount of thirty-eight million, seven hundred and thirty-nine thousand, four hundred and eighty-two Euros (38,739,482.00) was laid in the House on Friday, 19th May 2006 and approved by resolution on Thursday, 1st June 2006 by the House for the Koforidua Water Supply Rehabilitation and Expansion project.
Koforidua, the regional capital of the Eastern Region and its adjoining seven communities of Ada, Okorase, Oyoko, Effiduase, Jumapo, Asokore and about eighty (80) kilometers to the north of Accra.
Until 1938, there were no public water supplies in the Koforidua area. The town
relied on rainwater and shallow wells. The surrounding rural areas depended on shallow wells, River Densu and its perennial tributaries. In 1938, intake works were constructed on two of the tributaries of the River Densu, the Suhyen and Okume Streams.
Transmission mains, treatment works, a service reservoir and a distribution system were constructed at the same time.
The Koforidua Water Supply System hardly had any expansion or rehabilitation till the year 2003 when through the Six (6) Towns Water Supply Project, the existing plant was rehabilitated to increase production level from about 800,000 gallons a day to the present 1.2 million gallons a day. Since the rehabilitation and expansion of the system, the inhabitants of Koforidua and its environs have and are still increasing.
3.0 Project Cost and Financing Plan
The total cost of the project is
€38,739,482.00
The financing scenario is as follows:
Phase 1 -- €18,296,306.00
Phase II -- €17,226,249.00
Financing & I nsurance Costs -- € 3,216,927.00
€38,739,482.00
3.1 Details of Tax
The detail tax schedule as determined by the Customs, Excise and Preventive Service (CEPS) and the Internal Revenue
Service (IRS) is as follows:
Imports -- €6,435,095.58
Corporate -- € 630,525.36
Expatriate -- € 263,740.22
Total
€7,329,361.16
Attachment: Attached to this report is the Tax Assessment schedule on equipment and materials, corporate and expatriate income for the project.
4.0 Observations and Recommendations
The Committee observed that the project when implemented would enable the Ghana Water Company Limited (GWCL) to meet the water supply requirements of the growing population in Koforidua and its surrounding areas.
The Committee further observed that the benefits to be derived from the project include:
Improvement in the access of potable water
Improvement in the level of service by increasing service coverage in Koforidua municipality and surrounding towns and villages and reducing the level of non revenue water.
Growth in productivity of inhabitants leading to economic development and poverty reduction.
M a j o r b o o s t i n b u s i n e s s opportunities; mainly tourism and food, palm oil processing industries and
Maximization in social and health benefits of clean safe and reliable water supply.
The Committee again observed that the works include the;
Construct ion, supply and installation of electro-mechanical equipment;
Raw water intake at Volta Lake;
Water treatment plant near Volta Lake at Aterpoku;
Transmission pipelines including boosters and local reservoirs;
Distribution pipelines including standpipes;
Technical assistance to ensure the sustainability of the project.
The Committee noted that this project is one of the priority water projects of government which are intended to improve the water supply situation in the Koforidua municipality and surrounding towns, especially villages along the transmission route from the intake on the Volta Lake through Aterpoku to Koforidua.
The Committee also noted that clause 14.2 of the Loan Agreement requires that all equipment and materials as well as corporate and expatriate incomes shall be exempted from the payment of local taxes levies. 5.0 Conclusion
After carefully considering the strategic importance of the project and the need to ensure its smooth implementation, the Committee concludes that the request is necessary and therefore respectfully
recommends to the House to adopt its Report and grant the waiver of tax liability on equipment and materials to be imported or purchased locally, corporate and expatriate taxes totaling seven million, three hundred and twenty- nine thousand, three hundred and sixty- one Euros (€7,329,361.16) in respect of Koforidua Water Supply Expansion project in accordance with article 174 (2) of the Constitution.
Respectfully submitted.
