Mr Ken Ofori-Atta, Minister of Finance
Mr Ken Ofori-Atta, Minister of Finance

Govt revenue from airport dips by GH¢170.06m due to COVID-19

The country lost more revenue in airport taxes than it collected in the first half of this year, mainly as a result of the coronavirus (COVID-19) pandemic which broke out in the country in March this year.

Provisional fiscal data on public finances for the first half of the year showed that revenue collected from airport taxes yielded only GH¢117.82 million for the period.

This is against a target of GH¢287.88 million and represents a shortfall of GH¢170.06 million, representing a 59.07 per cent decline.

The amount collected is also lower than the GH¢239.70 million recorded in the same period in 2019, according to the data released by the Ministry of Finance last month.

The development is likely to impact the government’s annual revenue target of GH¢556.23 million from the levy.

The pandemic, the restrictions imposed on human movement, closure of airports and a three-month waiver of the airport tax component on air tickets are the major factors responsible for the revenue drop.

Further analysis of the data on public finance showed that there was a staggering revenue shortfall for every month until the tax waiver by the government took effect in May, where zero was recorded for the last two months ending June.

The airport tax component attracts between US$100 (economy class) and US$150 (business class) per passenger travelling international.

While regional travel attracts US$70 per passenger for the levy, domestic travel also contributes GH¢5 per passenger.

Airport tax

An airport tax is levied on passengers for passing through an airport.

The tax is generally imposed for the use of the airport and is one of a number of taxes that are typically included in the price of an airline ticket.

Revenue from airport taxes fund is used for facility maintenance. In the case of Ghana, part of the revenue collected from the tax is used to service the US$250 million loan secured for the construction of the Terminal Three of the Kotoka International Airport (KIA).

Economic realities

In an interview with the GRAPHIC BUSINESS on August 30 in Accra, the Fiscal Policy Specialist of Oxfam Ghana, Dr Alex Ampaabeng, said the shortfall in airport tax receipt was a true reflection of the economic realities of the pandemic across the world.

He observed that the virus had affected all government revenue sources, although taxes seemed to be the biggest hit so far.

"Trade, value added tax (VAT), corporate and personal income taxes have all recorded significant falls, and there are increasing signs that this trend will continue throughout the fiscal year.

"The restrictions put in place in the early stages have affected businesses and jobs. This means taxes related to payroll, business and services will automatically reduce just as imports with closed borders.

“Although in the first quarter our borders were opened, the restrictions in China and other countries in Europe impacted on Ghana’s international travel figures.

"The closure of the borders means no travels since mid-March, indicating that taxes from (goods) duties, passengers and airline companies are lost completely," he added.

Despite opening the country's airport to international passenger travel, the fiscal policy specialist said the revenue shortfall would continue until most countries reopened their borders to Ghanaian passengers.

"The shortfall will continue to be recorded even if borders are reopened because not all countries have opened their borders to Ghanaian passengers," he noted.
Read: Tax Effects of COVID–19 in Ghana
Project growth

Dr Ampaabeng, however, projected an appreciable improvement in revenue collected from airport tax in the fourth quarter of the year.

He observed that the Christmas festivities, coupled with the general elections, were likely to bring more people and goods home if the pandemic did not surge again.

"This will subsequently increase Ghana’s tax receipts from the airport, although it is certain that none of the quarter revenue target from the airport will be met in 2020," he said.

Up and running

Asked whether the reopening of the airport made economic sense, the tax expert responded in the affirmative and explained that it was essential to get the country’s economy up and running.

"From the tax and the broader economic perspectives, it makes perfect economic sense to reopen the airport to international passengers, although health implications (if care is not taken) could far outweigh these benefits.

"Aviation-wise, 2019 was a very successful year for Ghana due to the Year of Return (YoR) project. This gain would have continued in 2020 but for the COVID-19.

"It is important to open the borders to ensure that tourists, business people and citizens are able to return – each of these categories directly contributes to the taxes at the airports," he said.

Forward-looking strategies

Going forward, Dr Ampaabeng stated that the trend offered a basis for the government to adopt more creative and forward-looking strategies for revenue mobilisation.

"This is the perfect time for the government to adopt more creative and forward-looking strategies for revenue mobilisation.

"Property taxation reforms should be the top priority as it remains the surest way to generate additional revenue for the government in the next few years. In addition, effective e-commerce taxation remains a huge potential that should be urgently pursued," he added.

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