Question Tag: DACF

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  • 5 Marks

PT – July 2023 – L2 – Q1b – Overview of the Ghanaian Tax System and Fiscal Policy

Explanation of four functions of the District Assembly Common Fund (DACF).

Explain FOUR (4) functions of the District Assembly Common Fund (DACF). (5 marks)

The District Assembly Common Fund (DACF) is designed to ensure the equitable distribution of national resources for development at the local level. Its functions include:

  1. Proposing a Formula for Distribution:
    • The DACF proposes a formula annually for the distribution of the Common Fund, which is subject to approval by Parliament.
  2. Administering and Distributing the Fund:
    • It administers and distributes monies paid into the Common Fund to District Assemblies based on the approved formula.
  3. Reporting Utilization:
    • The DACF reports in writing to the Minister on how the allocations made from the Common Fund have been utilized by the District Assemblies.
  4. Performing Other Functions as Directed by the President:
    • The DACF performs other duties as directed by the President to support local governance and development.
  • 5 Marks

PSAF – July 2023 – L2 – Q5c – Public sector financing initiatives

Outline the sources of income for the District Assembly Common Fund (DACF) and the Petroleum Holding Fund (PHF).

In accordance with Article 175 of the Constitution of the Republic of Ghana, the Public Funds of Ghana consist of the Consolidated Fund, Contingency Fund, and such Other Funds as may be established by or under the authority of an Act of Parliament. Other Funds established by or under the authority of an Act of Parliament include the District Assembly Common Fund (DACF) and the Petroleum Holding Fund (PHF).

Required:
With respect to each fund (DACF and PHF), outline THREE (3) sources of income.

Sources of Income for DACF:

  1. 2.5% of VAT:
    A statutory transfer of 2.5% of Value Added Tax (VAT) receipts is made to the DACF monthly.
  2. Other Moneys Allocated by Parliament:
    Parliament may allocate other funds to the DACF as necessary, in addition to the statutory transfer.
  3. Donations, Grants, and Gifts:
    The DACF can receive income from donations, grants, and gifts from various sources, both domestic and international.

Sources of Income for PHF:

  1. Royalties from Oil and Gas:
    Royalties paid by oil and gas companies operating in Ghana are a primary source of income for the PHF.
  2. Revenues from Direct or Indirect Participation:
    Revenues derived from the government’s direct or indirect participation in petroleum operations, including state-owned enterprise (SOE) shares, contribute to the PHF.
  3. Corporate Income Taxes:
    Taxes levied on the profits of upstream and midstream petroleum companies operating in Ghana are also a significant source of revenue for the PHF.
  • 6 Marks

PSAF – Nov 2017 – L2 – Q1c – Public Sector Financing Initiatives

Calculate the total statutory amount to be transferred to the DACF and determine the equal share each local government would receive for the 2015 fiscal year.

The following information was produced by the Ministry of Finance for the 2015 fiscal year:

Revenue Source GH¢ million
Grants 1,130.70
Non-Tax Revenue 4,358.70
Taxes on Income and Property 9,238.30
Taxes on Domestic Goods and Services 7,061.70
International Trade Taxes 4,051.10
Other Taxes 161.40
The 1992 Constitution and the District Assemblies Common Fund Act 455 require Parliament to annually allocate portions of national revenue into the District Assemblies Common Fund (DACF) for distribution to local governments.

Required:

i) Calculate the statutory total amount to be transferred into DACF required by law and grant policy for the 2015 fiscal year. (4 marks)

ii) Assuming that Parliament approves for an equal distribution of the DACF for 2015 to all local governments, how much would one typical local government in Ghana receive as its share of the DACF for the 2015 fiscal year for development? (2 marks)

 

i) The total amount required to be transferred into the District Assemblies Common Fund (DACF) required by law for the 2015 fiscal year:

Under Article 252 of the 1992 Constitution, the DACF is to be calculated at not less than 5% of total national tax revenue. Currently, it stands at 7.5% of total national tax revenue.

Total National Tax Revenue can be calculated as:

Revenue Source GH¢ million
Taxes on Income and Property 9,238.30
Taxes on Domestic Goods and Services 7,061.70
International Trade Taxes 4,051.10
Other Taxes 161.40

Total National Tax Revenue = GH¢ 20,512.50 million

7.5% × GH¢ 20,512.50 million = GH¢ 1,538.44 million

Total Common Fund for 2015 is GH¢ 1,538.44 million.

ii) Amount of Common Fund Per MMDAs for the 2015 fiscal year:

GH¢ Million 1,538.44 = GH¢ Million 7.1224

MDAs

 

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