In considering the request, the Com- mittee met with the Deputy Minister for Finance and Economic Planning, Hon Seth Terkpeh, officials from the Ghana Cocoa Board, Ghana Revenue Authority and the Ministry of Finance and Economic Planning and hereby submits this Report.
The Ghana Cocoa Board contracts receivables-backed trade finance facility annually to finance cocoa purchases and other payments to stakeholders, which normally commence in October each year. This arrangement has been in place since 1994.
This year, twenty-two (22) local and international financial institutions were involved in arranging the facility amounting to one billion, five hundred million dollars (US$1,500,000,000.00) for the Ghana Cocoa Board. The facility does not require Government Guarantee as it is a commodities-backed loan facility.
3.0 Stamp Duty
Section 32(6) of the Stamp Duty Act, 2005 (Act 689) mandates that for documents to be executable, valid and enforceable in Ghana, such documents would have to be stamped.
However, the Commissioner of Internal
Revenue is empowered under sections 158(2) and 113(4) of the Internal Revenue Act, 2000 (Act 592) to waive Stamp Duty subject to approval by Parliament.
4.0 Total waiver requested
The total Stamp Duty to be waived on all the documents covering the facility is fifteen million dollars (US$15,000,000.00), thus one per cent of one billion, five hundred million dollars (1% of US$1,-
Attachment: Please find attached a letter from the Commissioner of Internal Revenue Service (Domestic Tax Revenue Division of the Ghana Revenue Authority) providing the assessment of the Stamp Duty payable on the facility.
The Committee observed that the facility did not require Government Guarantee, as it is a receivables-backed loan facility.
The Committee was, however, in-formed that one of the conditions precedent of the Loan Agreement is that Ghana Cocoa Board initiate the necessary actions to obtain a waiver of Stamp Duty for the facility by 31st December, 2010.
The Committee was further informed that the Ghana Cocoa Board has resorted to contracting offshore loan facilities for annual cocoa purchases. This is because borrowing from the local market has proved to be very expensive. Again, local banks do not have the capacity to lend the quantum of funds required for cocoa buying operations.
The Committee took note of the fact that over the years, the cocoa industry has played a major role in the economic development of Ghana. It has continued to play this role in terms of its contribution to Gross Domestic Product (GDP), employment generation, and as a major
source of foreign exchange earnings.
The sector has also made substantial contribution to revenue generation through the payment of export duty, inter alia.
It was noted that most of the foreign exchange earnings from cocoa are retained in the country for the country's developmental needs.
Members of the Committee were worried that the principal Loan Agreement was contracted without parliamentary approval. The Committee agreed that in line with article 181 of the Constitution, the substantive loan should henceforth be brought to Parliament for consideration and approval.
The Committee has carefully examined the request and has taken cognizance of the key role played by the Ghana Cocoa Board in the country's economy as well as the strategic nature of the facility to Ghana Cocoa Board's operations.
The Committee, therefore, recommends to the House to approve by Resolution, the waiver of Stamp Duty of 1 per cent (amounting to US$15 million; equivalent to GH¢22,500,000.00) on the Offshore Syndicated Receivables-backed Trade Finance Facility of US$1,500,000,000.00 for 2010/2011 Cocoa Purchases by the Ghana Cocoa Board in accordance with section 32 (6) of the Stamp Duty Act, 2005 (Act 689), sections 158 (2) and 113 (4) of the Internal Revenue Act, 2000 (Act 592) and article 174 (2) of the 1992 Constitution of the Republic of Ghana.
Ranking Member of the Committee (Dr A. A. Osei): Mr Speaker, I beg to second the Motion.
Mr Speaker, I would be very brief on this matter and let my other Hon Colleagues speak on it.
In my opinion, the most important challenge here is really not what is before us. Mr Speaker, there is a standing problem which somehow, the Cocoa Board and the Ministry seem to be ignoring.
The Constitution says that any loan contracted by any agency must be approved by this House. Even though this facility is not controversial, somebody either at Cocoa Board or the Ministry of Finance and Economic Planning always does this without an approval. Last year, the point was made that they should not initiate a facility without coming here.
This year, if you read the memorandum that went to the Hon Minister, they are still suggesting that they do not need parliamentary approval. Mr Speaker, this House must take this matter seriously. The Act of the Cocoa Board was done before the Constitution came. But once the Constitution is in place, every other law in this country must be consistent with the Constitution.
Mr Speaker, as I said, this matter is not controversial, therefore, I do not see why Cocoa Board and the Minister should not come here first and seek our approval before going to borrow. Now, what we are stuck with is that, this matter must be cleared before December 31. So in essence, we are being asked to rationalize it.
Mr Speaker, I think the Hon Minister for Finance and Economic Planning should be advised that next time round, this House cannot continue to condone in what is an illegality. The Constitution is very clear, and we would not wait and say