Market Place || Tax on Lottery And Betting: GRA hopes to generate Ghc1.2 billion by end of year

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Transcript

00:00 Hello, good afternoon. Welcome to the Marketplace. Coming up, Jerry Kofi Hinson resigns as Managing

00:04 Director of the Tama Oil Refinery on health grounds. Ahead, we discuss how the protracted

00:09 leadership crisis at Tor is stalling revamp efforts.

00:15 Also coming up, 10% withholding tax on lottery and betting takes effect tomorrow, August

00:19 15, as the GRA hopes to rake in 1.2 billion CDs at the end of the year. We hit the streets

00:25 to talk to patrons.

00:27 Good, but its disadvantages are more than the advantages.

00:34 But I've not seen any difference before and after taking the e-levy. So, to this, I feel

00:41 taking the 10% is because of the economic crisis we have in the country.

00:46 Ahead, government recalls 15.35% oversubscription of treasury bills, last Friday's auction,

00:54 but at a higher cost.

00:58 My name is Daryl Kwah. Thanks for being with us. Details coming up.

01:20 And thanks for staying with us, everyone. First up, there are mixed reactions over the

01:23 10% withholding tax on gaming which takes effect tomorrow, August 15. Some individuals

01:28 who spoke to Joy Business described the tax as unfair and could dash the interest of the

01:32 game. James Eshen has more in this special feature.

01:37 Coach Ali is a staunch AC Milan fan whose betting journey started in 2010. A man who

01:43 has explored different betting platforms says the tax is likely to dash the hopes of the

01:48 young Ghanaian.

01:49 I started betting around 2010. 2010, yes, in Kumasi. That time we had Safari, my bet,

02:00 a couple of premier bets and the rest. 2010, yes. And it's not something I will say is

02:06 bad. It's bad and good. But its disadvantages are more than the advantages. And I've always

02:14 said betting was introduced to weaken the African youth. So it has a lot of disadvantages

02:20 than its advantages. You see, it is not proportional. You lose more than gaining. And if you are

02:29 to gain more than losing, then the betting companies will definitely collapse.

02:33 Are you still sticking or you've stopped?

02:36 For now, I'm thinking about it because for the past one and a half seasons, I've not

02:43 won. OK, I've not won. And if you permit me, I will show you my history. I can show you

02:49 I've not won. And I've also heard the government is now introducing 10 percent of what you

02:56 win because of the economic crisis. I can even show it to you. There was a time I staked

03:02 0.02 pesos. I just needed hope. You see, I just needed hope. So and all this, I can

03:11 tell you lost, lost, lost, lost. The last time I won a bet was two years ago, two years

03:15 ago. But I've been staking 30 cities, 40 cities, 50 cities, five cities, two cities and 0.02

03:21 pesos. So it tells you how the economy is.

03:24 The story isn't different for Chika Taa, a level 200 student of the University of Ghana

03:29 Stadium Sociology. She says the move is unfair and she expects government to do better.

03:35 I don't agree with this because first before it was E-Levy and then before the E-Levy was

03:41 introduced, how I saw the country, the development and all that. After the E-Levy, I was expecting

03:48 a difference, like I should see a difference in the development of the country. Maybe this

03:52 is what the E-Levy was used for. But I've not seen any difference before and after taking

03:57 the E-Levy. So to this, I feel taking the 10% is because of the economic crisis we have

04:04 in the country. And to me, I don't believe after taking this, there's going to be any

04:09 change in the development of the country as I thought it was going to be a change, there

04:14 was going to be a change during the E-Levy. So to me, I don't agree with this. And then

04:19 secondly, when I bet and then I win, you take 10%. But when I lose, what's going to happen?

04:26 You're not going to give me any 10%. So it's not being fair. After all, it's my money I

04:30 invested in the betting. So if I lose and I don't get anything, but when I win, you

04:34 get something. That's very unfair to me.

04:36 Ibrahim is a trader. He thinks otherwise. He tells me that tax on gaming is good, but

04:42 expects the 10% to be reviewed because the rate is high.

04:46 For tax, it's good for us because it's a development. We can't refuse from tax. Tax is good. But

04:53 if you tax the person, if the person who taxed it is too high, he can't even pay. Even he

04:58 will draw from the belt. So he will be dodging. Because if I go and say, then I pay 10 CDs,

05:06 next time I'll come and say again. No, I won't come again. But even if you tax me like 2

05:12 CDs, then it's good for me. So if you tax me about 10 CDs, I'll even pay more.

05:19 The application of this levy is part of a broader review of the income tax on gaming

05:24 and lottery operations in the country.

05:27 It's going to discourage most of the youth in going through this betting, this lottery

05:32 and all that. And in another way too, most of us are unemployed. Most of the youth in

05:39 Ghana are unemployed. So many of them are using this bet platforms to get income, to

05:45 get money into their accounts and all that to do one or two things that they need to

05:49 do. So I think in a way it's going to help, but in a way it's not going to help us too.

05:55 There are no jobs in Ghana and the youth would actually be indulging in criminal activities

06:03 such as armed robbery or just to get money for their own benefit. But betting companies

06:08 have come to make the youth also have a better way of getting money, which is in a way not

06:15 good, but it's better than being an armed robber.

06:19 Someone who had bank or plenty and did not make good use of it, that small amount cannot

06:24 do anything. So what have they done with the eLevy? And mind you, you are taxing the betting

06:29 companies. What have you done with it? You are taxing the telcos. What have you done

06:34 with it? And now you are going to tax the poor boy who comes from Obwase, who is just

06:39 trying to buy hope so that he doesn't engage himself in immoral acts. What are you going

06:44 to do with it? Even the three billion, you did nothing with it. What are you going to

06:47 do with that 10 percent? It is not going to help us. So you see, they are lazy and they

06:55 are using the lazy man approach. And if you use the lazy man approach, there is no significant

07:00 impact in the society. So it's better they stop. It has no positives. It has no advantages.

07:07 I'm urging them, if they think we win, they should take Ghana's results, go there and

07:12 stake and see if the youth win. That is where they will know that they have to put money

07:17 into the pockets of the youth every month. At least 500 cities on my momo. Then it comes.

07:23 The withholding tax deduction according to the Ghana Revenue Authority applies to winnings

07:27 paid or payable by private lot operators, sports betting operators, casino operators,

07:33 route operators, remote interactive game operators, operators of marketing promotions and operators

07:40 of other games of chance. JMC Chance reports for Joy Business.

07:45 All right, on Zoom with us, Francis Timor-Boye, who is a tax analyst. Good afternoon to you.

07:52 So first question, what do you make of the GRA's move to impose 10 percent withholding

07:58 tax on lottery and bet wins? Long incoming or like we had one of the people who spoke

08:04 to JMC, a lazy way of taxing Ghanaians? Thanks, Daryl. I think that we have to go

08:13 back to 2015. Around the world, lottery is seen as an investment. So if you put your

08:20 money in lottery and you win, you pay tax on it. And I think this is not only in Ghana.

08:25 We have it around the world. In Ghana, let's go back to 2015. 2015, when we passed the

08:30 Income Tax Act, there was a provision that says that lottery winning is taxable as an

08:37 investment in Ghana, section 115 of the Income Tax Act. Then in 2016, there was some amendment

08:44 that was made that if you win below 2,592 Ghana cities, then the income was exempted.

08:52 Any amount that exceeded 2,592 was taxable. Then in 2017, the National Lottery Authority

09:00 made a proposal that really the tax was having an impact on the operators of lottery in Ghana.

09:05 So some changes were made and then the law was scrapped. So 2023, we are seeing it coming

09:11 back. So if you ask me. Unfortunately, Francis, the small boy, is frozen.

09:21 We'll try and get him back on. But like we've been reporting, from tomorrow, there is a

09:24 10% withholding tax on lottery and betting. We have been speaking to some Ghanaians about

09:32 this. Remarkably, one person who says, "Well, what are they going to use the money for anyway?"

09:38 And also concerns about what we saw happen with the electronic transaction levy, where

09:45 government didn't meet its targets because people fear that this could discourage people

09:49 from lottery or betting. Well, back with us, Francis, the small boy. So you're making a

09:53 point, Francis.

09:54 Well, any tax that is introduced will certainly have an impact on the behavior of people.

10:05 But I don't think that this is going to have a negative impact. Remember, it's an investment

10:09 that people are doing. So when they make income, just like someone has invested in shares and

10:13 he has made gains, the person will pay tax. We should see some impact on people, but I

10:19 don't think that this is going to significantly distract people from taking the gain.

10:27 Yeah, we just lost you a bit whilst you were making your initial point about whether or

10:31 not this was a good move by the GRA. What is your conclusion on that?

10:39 I think it's a fair move. If you look at the drafters of the Income Tax Act in 2015, it

10:47 clearly indicated that it's an investment income. And so I don't see why somebody would

10:51 make an investment and make a gain there from paying tax. It's a way of widening the tax

10:57 net. So for me, I think it's the best. The only concern that I have is that the rates

11:01 appears to be a little high. Remember that if you lose, we don't tax you. If you lose

11:05 the money, I mean, if you place the bet and you lose, we don't consider it. It's only

11:09 when you win. So I think that the 2015, 2016 approach where if people could make gain at

11:18 above 2,500, that is where we tax them. That was the best approach. So for me, I would

11:23 have recommended...

11:24 Yeah, isn't that the concern though that...

11:26 She's asking.

11:27 Yeah, isn't that the concern though that we may see a repeat of what we saw with the electronic

11:32 transaction levy?

11:34 No, I don't think so. I don't think so. Trust me, people will continue to invest and they

11:41 will make their returns. What we could do is that to take care of the poor, we could

11:45 have set a threshold, maybe 2,000, 2,500 and say, if you win above that one, then we're

11:51 not going to tax you. That is the best approach we could have done.

11:54 Okay. I want to ask you about the target though. Government hopes to rake in 1.2 billion CEDs

12:01 at the end of the year. In 2024, hopes to rake in 3.3 billion Ghana CEDs. Realistic

12:08 target and how significant is that in boosting our revenue as a country?

12:15 I think it's significant. If you look at the industry, the betting industry, 2016, it was

12:20 valued at $70 billion. 2023, it is estimated to be $182 billion. So the industry is growing.

12:30 At a very fast pace. You can see the players even sponsoring football games. These days,

12:37 when they are playing Premier League, you see them sponsoring. So I think it's possible.

12:42 The only threat I see is that now we may have on-license offshore players. If they are able

12:49 to infiltrate into the market, they may not go through the licensing requirements at the

12:54 gaming commission. And if people can place their bets and they get their money, why not?

12:58 So at the end of the day, those people will escape the tax. India was suffering the same

13:04 problem where offshore operators were able to provide the gaming. People could get their

13:10 money when they win, but you can't find them because they are offshore. That is the only

13:16 threat that I think that the GIA will have to find a way to secure and protect offshore

13:20 on-license operators into the game. Remember, Premier League people place their bets. And

13:25 I don't need to be in Ghana to place a bet. If I can do that via MUMO, I can do that via

13:30 my Visa card, I can play it and then get paid. And I go away with a 10%.

13:38 You mentioned India. India, for example, slapped a 28% tax on online gaming. And so comparatively,

13:44 10% is cheaper. However, would it make sense to reduce a percentage so we don't lose numbers?

13:50 I know you've also said you don't think there'll be a significant impact on patronage

13:55 of Lottri or Betten for that matter.

14:00 So for me, the industry in Ghana is quite at its early stage. So yes, India might have

14:06 developed their gaming industry, so they are more developed. I think that 5% would have

14:11 been effective. It would have started just like we had in 2016 before we scrapped it.

14:16 5%, then we provide some minimum threshold for the young unemployed guys. If you win

14:23 1000, I mean, we should let them go. Then if you win above some threshold, then those

14:28 are the people we know that they are really doing serious investment and then we will

14:33 tax them.

14:34 And finally, an important part of all of this is the Lotto operators. So how does the GIA

14:40 work effectively with the operators to achieve the results that they intend to?

14:47 So fortunately, these people are licensed by the Gaming Corporation, so we know where

14:53 they are. So if you know where these people are, I mean, compliance and implementation

14:58 becomes easy for you. So I don't think the GIA is going to have any challenges with them

15:02 at all. And remember, the amount, the taxes will be held before the amount is paid to

15:09 the winner. So I see a smooth operations with the GIA. And the only instances where we may

15:15 have or may have challenges is where we have unlicensed operators in the system. That is

15:22 where we're going to have some challenges. Otherwise, I think that we should see a smooth

15:26 implementation, good working relationship with the operators and the GIA.

15:30 I guess the next step is to deal with the unlicensed operators. Thank you so much, Francis

15:35 Timoboy, tax analyst. I appreciate your time with us on the market. Please, let's turn

15:39 to one of our top stories this afternoon. Jericho Feehenson has resigned as managing

15:44 director of the Tama Oil Refinery. He resigned from his post on health grants. He has submitted

15:49 his resignation letter to the president and copied the board of directors of the Tama

15:53 Oil Refinery and the Minister for Energy on Friday. His resignation comes as the store

15:58 has been heavily criticized for the attempted lease of the refinery to a private firm, Terenco

16:03 Assets Management, a firm registered about six months ago without a track record in the

16:08 oil and gas business. Now, think tanks in the energy sector oppose the deal, arguing

16:12 that it is not in the favor of the country. On Zoom with us is energy strategist, also

16:17 CEO of Eureka Solutions and energy consultancy firm, Dr. Yusuf Suleymano. Good afternoon

16:23 to you. So, first, your reaction to Jericho Feehenson's resignation and what kind of legacy

16:29 does he leave behind? Yeah, thank you very much. Good afternoon to you, Daryl, and good

16:36 afternoon to you, Cheryl, and the rest of Ghana and the rest of the globe. Thank you

16:39 for having me. Indeed, that is not something I'll call pleasant news, pleasant news, Daryl.

16:46 This due to the fact that, I mean, the refinery is actually crying for leadership, a leader

16:53 that we can take account of for what is brewing. And you just mentioned the fact that we have

16:59 some deals on the table and everybody was, we're all of the fact that, of the expectation,

17:05 we're all of the view that this might be the deal that will need it, that will get Thor

17:11 back to operations. But the deal, of course, was surrounded with a lot of controversies.

17:17 What legacy does he leave? It's just too early. We're told that he was forceful to get a deal

17:24 for Thor, but it didn't happen. He has to go. However, these reasons that they've given

17:31 for his resignation, I personally would take it with a pinch of salt. Because if you look

17:36 at the past resignations, where there was on head grounds. Anyway, if you have so much

17:40 pressure on you, that's a tantamount to maybe psychological head grounds, I don't know.

17:45 But what my disappointment is the fact that, Daryl, the refinery is suffering from leadership

17:50 vacuum. And without any clear-cut leadership input in place, where actors within the industry

17:59 can take the lead on when things are not going on. Then we are not going anywhere. So yes,

18:03 two problems come from the refinery. One is a leadership crisis that we have. Daryl, we

18:08 are talking about an entity that has changed managing directors, closer to five different

18:13 managing directors. And this is not even running, I mean, not continuous, I mean, not in the

18:18 core business. Then what is it that we can't get somebody to manage it? What are the core

18:22 key interests that's prevailing in the refinery that we can't just get somebody to manage?

18:28 And even that, if you don't want anybody to manage, I think if you had left the refinery

18:33 to run on its own, I mean, to take care of its own affairs, I think they'll do better

18:37 than the way we are handling it now. So I'm very disappointed with this resignation. One,

18:42 for the fact that it's going to create another vacuum, where we have to say to another leader,

18:47 how many managing directors do we have to change before we can get someone to run in

18:50 the refinery? So it has happened. I just want to call on the duty bearers to look into the

18:57 issue and ensure that a very good leadership, a leader who is very entrepreneurial and focused

19:03 to get a deal for the refinery. The refinery is trying to get back to business. And this

19:08 is not a time that we have to let our individual interests, parochial interests, come to play.

19:14 No, that's not a time. The HITOW would get a very focused leadership to run the refinery

19:18 for better. Other than that, we don't have any justification, any justification to say

19:23 the refinery is not profitable. So if the refinery is not an ISCOR business, put it

19:27 to refine, the refinery has not been an ISCOR business, how do you measure the refinery

19:32 in terms of efficiency? So that I find very disappointing. I just hope that the duty bearers

19:38 will fine tune whatever is going on, clear the mess and get focused and get a deal in

19:44 the refinery to make sure that the refinery gets to business as soon as possible.

19:47 Obviously, the leadership crisis at the Thema Oil Refinery is stalling revamp efforts. And

19:53 so if we don't get a quick fix to the leadership crisis, how is that impacting on our energy

19:59 security and by extension, our national security?

20:05 So that's a very interesting question. I think in Ghana, what we haven't been able to appreciate

20:13 is the fact that unemployment is clearly linked to national security. And I think we haven't

20:20 gotten that fact. And to forget the fact that unemployment is a key national security issue,

20:27 then we will not take issues of what is going on as true. So how is oil linked to our energy

20:35 security? Two ways. Number one, we are heavily dependent on importation of finished products.

20:40 You all know what happened a couple of years ago, not years ago, maybe some months ago,

20:46 a year and a half ago, about COVID. Nobody knows what pandemic is on the horizon or whatever

20:54 natural disaster that can happen. And I'm just saying, please don't recall that. Ghana,

20:58 we don't have any backup. That means our importers are not able to bring in finished products.

21:04 Have you thought of that? Our backup would have been our storage capability. It's zero.

21:09 We don't have that. We just listened to the MD of BOS talking about the fact that they

21:14 don't have any strategic reserve. So we don't have strategy. Now we don't also have the

21:20 refinery. So let's play the devil's advocate. Assuming our hard-working importers are not

21:24 able to bring in finished products for a month, what is the backup? Nil. That is a huge energy

21:30 security issue. And a prolonged energy security issue is tantamount to a national security

21:37 issue. That's number one. Number two aspect, where we are importing this finished product

21:41 from? We are importing it from Europe. And Europe is making a frantic effort to rule

21:47 out the energy transition. In fact, they want to make sure that, I mean, the internal combustion

21:53 engines have burned by 2035. I see that as being a good, but assuming they succeed in

21:58 that, they'll not have any need for a refinery. So what are we going to do? So refinery being

22:03 available is the necessity. We then need to do that. Then finally, I had my first experience,

22:10 wet experience, with the refinery. And that catapulted me into the heights of energy industry.

22:16 In Torda, we have a lot of teaming up at this moment who don't have any place. So even if

22:23 we don't think about anything at all, we should be mindful of the fact that we have a lot

22:28 of universities. Those are the times that we had only chemical engineering. Now we have

22:32 petrochemical engineering. We have petroleum engineering. We have other stream engineering.

22:38 And not only that, we have all other disciplines. You can talk about legal, and you can talk

22:43 about immediate speech. You can talk about, I mean, every discipline. So if oil and gas

22:49 industry is developed, that's the quantum of job opportunities it creates. It doesn't

22:54 discriminate any discipline. And so I see that we are just a bunch of-- I mean, we are

22:59 not see-throughs. If we look at what Tord ranks, and we add value to the raw material,

23:03 if the value chain starts before it ends, the kind of employment it's going to create

23:07 is enormous. And unemployment is a national security issue. And so that's why I'm saying

23:11 that Tord running is a necessity, and it's a national security issue. And if we don't

23:16 do that, I think it's just going to impact us greatly.

23:19 All right. We just have one minute. I know by now there is a search on for a substantive

23:24 CEO for Tord. There's someone acting at the moment. Is that the only fix that we need

23:31 right now? What's the way going forward?

23:34 Yeah. So the way forward is simple. Let's get a substantive CEO, a managing director.

23:42 And the most important one is to stay out of unsolicited political interference, unwarranted

23:48 political interference. If we want Tord to work, then we have to have zero interference.

23:53 Let's resist the temptation. I know the stakes are very high, but we should measure the largest

23:58 stake with respect to the nation's interest. So two things needed to happen, or need to

24:02 happen, that one, we have to get a substantive leader who is well-focused, who has built

24:07 an entrepreneur mind. And then not only that, there is no excellency on the part of a leader

24:12 who will succeed until we stop this political interference. If we don't stop that, we are

24:17 not moving anywhere. So yes, we need a double-focused leader. Then we need to make sure that we

24:22 minimise or we zero in this interference, that unwarranted interference in the day-to-day

24:27 life of the employee. If we do that, and then give the leader some KPIs, key deliverables,

24:32 and take the leader accountable when the leader doesn't deliver. Other than that, we are not

24:35 moving anywhere.

24:37 All right. Thank you so much, Dr Yusuf Suleymana, Energy Strategist. I appreciate your time,

24:41 as always. Let's turn to the money market now. Gapme recorded a 15.35% oversubscription

24:48 of Treasury bills but at a higher cost. According to the auction result from the Bank of Ghana,

24:53 the Gapme received 3.507 billion CEDs from the sale of the short-term securities. Total

24:59 bids tendered were estimated at 3.535 billion CEDs. Here's more.

25:05 All bids tendered were estimated at 3.53 billion CEDs. Chunk of the T-bill sale came from the

25:14 91-day bill. About 2.52 billion CEDs was secured as government accepted almost all the bids.

25:22 This time around, the bids received for the one-year bill were over three times more than

25:28 that of the six-month bill. Indeed, 747.8 million CEDs were the bids tendered but the

25:37 government accepted 721 million CEDs of the bids offered. Meanwhile, interest rates shot

25:44 up across the yield curve. Whilst the 91-day bill went up to 26.09% from 25.57% the previous

25:55 week, that of the 182-day bill rose by 0.31% to 27.59%. The 364-day bill also reached 30.69%

26:09 from the 30.49% recorded the preceding week. Analysts anticipate that the rising interest

26:17 rates will continue till government concludes the debt restructuring exercise.

26:24 And I'm excited to tell you Money Lab is back. Here's today's episode.

26:29 Hello and welcome to Money Lab. My name is Kofi Poli, and I'm Chief Operations Officer

26:34 of People's Pension Trust. On Money Lab today, we will look at pension

26:39 tenders. Our first episode, we will look and try to understand what pension is. Pension

26:46 is basically a plan to put in place for our old age income security. Some also call it

26:53 a pension. A pension is a tax-effective way of saving, especially where tax exemptions

26:59 are in there. Now, pensions are self-funding. By that, what we mean is that all the parties,

27:05 employer, employee, self-employed, must contribute into this fund so that in their old age, the

27:12 fund will pay out some monies to the members. Thank you for being with us. Hope to see you

27:18 in the next episode.

27:20 Check on what's trending on our website before we go.

27:25 Inflation will get worse before getting better.

27:29 More news, myjournalline.com/business. See you same time tomorrow.

27:34 [Music]

27:55 [Music]

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