Finance Minister Dr. Cassiel Ato Forson says Ghana must put in place stronger mechanisms to ensure the country captures a greater share of the wealth generated from its gold, oil and other natural resources.
He argued that while investors and shareholders in the extractive sector deserve reasonable returns on their investments, the Ghanaian people, as owners of the country’s natural resources, must also benefit substantially from the wealth generated.
Dr. Ato Forson said the principle is at the heart of Ghana’s approach to economic rent, particularly through the use of a sliding-scale royalty regime that takes into consideration the cost of production and profitability of extractive operations.
“It is a fact that shareholders must benefit, but it is also a fact that the owners of the resource must also benefit.”
Ghana must capture ‘economic rent’
According to the Finance Minister, the state should not be limited to collecting conventional taxes and royalties while companies make exceptional profits from the exploitation of Ghana’s finite resources.
He explained that after an extractive company has recovered its holding costs and earned a reasonable return on its investment, the additional profits generated from the resource should attract a greater share for the state.
“This is what taxation refers to as economic rent tax,” Dr. Ato Forson explained, describing it as a mechanism through which resource-rich countries can capture part of the exceptional returns generated from their natural resources.
He maintained that the approach is not designed to punish investors but to ensure a fairer distribution of the economic value created from resources that belong to the people of Ghana.
‘We are not driving investment away’
Dr. Ato Forson also rejected concerns that policies seeking to increase the state’s take from the extractive sector could scare away investors.
He said similar fiscal mechanisms are used in other resource-rich jurisdictions and argued that investors can still earn attractive and reasonable returns while the state captures a portion of exceptional profits.
“When government introduced this from the beginning, impressions were created that we are driving investment away. Far from it.”
The Finance Minister stressed that Ghana’s objective is to create a fiscal regime that balances the interests of investors with the interests of the Ghanaian people.
‘Ghanaians must benefit from their own resources’
Dr. Ato Forson said the debate over taxation of the extractive sector must ultimately focus on how natural resource wealth is converted into tangible development for citizens.
He insisted that Ghana should not continue to export valuable raw materials while receiving an inadequate share of the wealth created from them.
“All what government of Ghana was asking for was for the people of Ghana to benefit from its own resources.”
He said strengthening the state’s ability to capture economic rent from gold, oil and other extractive activities would be critical to improving domestic revenue mobilisation and ensuring that Ghana’s finite natural resources generate lasting economic benefits for present and future generations.
