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Constitution law -
Interpretation and enforcement -
Articles 176(2), Articles
2(1)(band 130(1)(a) 252 clause
2 - District Assemblies Common
Fund - Earmarked Funds Capping
and Realignment Act, 2017 (Act
947) and Section 126(2) of the
Local Governance Act, 2016 (Act
916) – Sections 3, 16 and 21 -
Section 78(a) of the National
Health Insurance Act, 2003 (Act
650). Section 78(a) - National
Health Insurance Act, 2003 (Act
650) - Petroleum Revenue
Management Act, 2011 (Act 815) -
Section 2 - Road Fund Act, 1997
(Act 536) - Whether or not to
limit the proportion of revenue
to be allocated to the District
Assemblies Common Fund to tax
revenue and not total revenue,
are inconsistent with and in
contravention of the
Constitution – Whether or not
the exclusion of the District
Assemblies Common Fund in the
disbursement of benchmark
revenue from oil operations as
provided for under sections 3,
16 and 21 as well as the
Petroleum Revenue Management
Act, 2011 (Act 815) as amended
is unconstitutional and
therefore null and void -
Whether or not upon a true and
proper interpretation of article
252(2) of the Constitution the
term “total revenues” means all
revenues irrespective of source
- Section 3(a) - Ghana Education
Trust Fund Act, 2000 (Act 581) -
Whether or not the purported
exclusion of the District
Assemblies Common Fund from the
disbursement formula of
benchmark revenue from oil
operations as provided for in
sections 3, 16 and 21 as well as
the First schedule of the
Petroleum Revenue Management Act
2011 (Act 815) is inconsistent
with or in contravention of the
Constitution - Whether or not
upon a true and proper
interpretation of the
Constitution sections 3(2), 3(5)
and 7 of the Earmarked Funds
Capping and Realignment Act,
2017 (Act 947) and section
126(2) of the Local Governance
Act 2016 (Act 916) are
inconsistent with Article 252(2)
of the Constitution to the
extent that the said statutes
purport to limit the proportion
of revenue to be allocated to
the District Assemblies Common
Fund to tax revenue+
HEADNOTES
The facts giving rise to this
action are common cause between
the parties and are coherently
and concisely set out in the
Defendant’s Statement of Case as
follows. Article 252(1) of the
1992 Constitution established
the District Assembly Common
Fund (DACF) and Article 252(2)
mandates Parliament to make
annual provision for the
allocation of not less than five
percent (5%) of the total
revenue of Ghana to District
Assemblies for development, to
be paid into the District
Assemblies Common Fund in
quarterly installments. Towards
the implementation of the
provisions of Article 252,
Parliament passed the District
Assemblies Common Fund Act, 1993
(Act 455), Section 17 of which
defined total revenue as revenue
collected by or accruing to the
Central Government other than
foreign loans, grants, non-tax
revenue and revenues already
collected by or for District
Assemblies under any enactment
in force. Subsequently, in 2016,
Parliament passed the Local
Governance Act, 2016 (Act 936)
which repealed the District
Assemblies Common Fund Act, 1993
(Act 455). Section 126(2), of
Act 936 provides that the total
revenues of the country includes
the revenues collected by or
accruing to the Central
Government other than foreign
loans and foreign grants,
non-tax revenue, petroleum
revenue paid into the Petroleum
Holding Fund under section 3 of
the Petroleum Revenue Management
Act, 2011 (Act 815) and revenues
already collected by or for the
District Assemblies under any
enactment. Furthermore, section
234 of Act 936, defined “total
revenue” as the entire revenue
collected by or accruing to the
Central Government other than
foreign loans, grants, non-tax
revenue and revenues already
collected by or for a District
Assembly under an enactment.
Additionally, Parliament passed
the Earmarked Funds Capping and
Realignment Act, 2017 (Act 947),
which puts a cap on all
earmarked funds including DACF
as specified in that Act. The
objective of this Act is to
ensure that all Earmarked Funds
specified in the said Schedule
is twenty-five percent of tax
revenue, which the Minister of
Finance must ensure is allocated
to the Earmarked Funds specified
in the Schedule, each according
to a weight approved by
Parliament as part of the Annual
Budget for each fiscal year and
each Earmarked Fund must be
adjusted accordingly. By section
3(5) of Act 947, however, the
Minister of Finance is enjoined
to comply with any quantum of
revenue allocation or retention
of Internally Generated Funds
that is provided for under the
Constitution In December 2017,
the Ministry of Finance
presented the Budget Statement
and Economic Policy of the
Government of Ghana for 2017
Financial Year to Parliament. In
the budget, the total revenue
including oil tax revenues was
stated as amounting to GH¢
34,382,052,975.00 Thereafter, by
the Appropriation Act (No. 1),
2017, (Act 945), enacted to
execute the said budget, an
amount of GH¢ 1,575,935,339.00
was allocated to the DACF the
Plaintiffs’ complaint herein is
that the amount allocated under
Act 945 (i.e. the 2017
Appropriation Act) to the DACF
was not 5% of the total revenue
of that year. Rather, the
Plaintiffs alleged that the
Finance Minister, in calculating
the allocation for the DACF,
excluded non-tax revenue and oil
revenue in reliance on the
provisions of Acts 815, 916 and
947. According to the
Plaintiffs, these provisions are
inconsistent with and in
contravention of Article 252(2)
of the Constitution, and are,
thus, unconstitutional and void.
HELD
We, therefore, make the
following Orders:
1. Relief 1 endorsed in
the plaintiff’s writ of summons
is dismissed as upon a true and
proper interpretation of Article
252(2) “total revenues of Ghana”
does not encompass every revenue
no matter the source; we so
declare accordingly.
2. a) To the
extent that Sections 1(2),
2(b),3(1)(b),3(5)(a),7(a), and 8
of the Earmarked Funds Capping
and Realignment Act,2017(Act
947) and Section 126 of the
Local Governance Act, 2016 (Act
916) purport to limit the
proportion of revenue due for
allocation to the District
Assemblies Common Fund as
established by Article 252(2) of
the Constitution, the same are
in the contravention of the
Constitution and are hereby
declared to be null and void.
b) Consequently the
District Assemblies Common Fund
is hereby deleted from the
schedule to the said Act 947;
and the references to the Annual
Budget Funding Amount, provided
for by Section 16 and 18 of the
Petroleum Revenue Management Act
2011 (Act 815) from tax Revenue,
in Section 126 of the Local
Governance Act are hereby
deleted.
c) For avoidance of
doubt such amounts of Internally
Generated Funds that Parliament
has, pursuant to Article 176(2)
(b) authorized to be retained by
departments that receive them,
as provided for under Act 947,
remain valid and in effect.
3. Relief 3 is
dismissed.
4. Consequently, we
hereby direct that in
calculating the annual amount to
be allocated to the District
Assemblies Common Fund, the
Defendant shall comply strictly
with the provisions of Article
252(2) as construed and
interpreted in this judgment.
“Total Revenue of Ghana,’’ for
purposes of allocation to the
District Assemblies Common Fund
shall include Petroleum Revenue
allotted as Annual Budget
Support amount and non-tax
revenue paid to Central
Government. Total Revenues of
Ghana shall not include foreign
loans and grants, Petroleum
receipt paid into the Heritage
and Stabilization Fund, retained
Internally Generated Fund and
levies imposed by Parliament for
specific purposes under an Act
of Parliament.
STATUTES REFERRED TO IN JUDGMENT
1992 Constitution
Local Governance Act, 2016 (Act
916)
Earmarked Funds Capping and
Realignment Act, 2017 (Act 947)
Petroleum Revenue Management
Act, 2011 (Act 815)
Road Fund Act, 1997 (Act 536)
Ghana Education Trust Fund Act,
2000 (Act 581)
Interpretation Act 2009 (Act
792)
CASES REFERRED TO IN JUDGMENT
Ghana Bar Association v Attorney
General and Another [2003-2004]
1 SCGLR 250,
Bimpong Buta v General Legal
Council [2003-2004] 2 SCGLR
1200, 2SCGLR 1038
Abu Ramadan v Electoral
Commision Writ No.J1/14/2016.
Republic v High Court
(Commercial Division), Accra: Ex
Parte Attorney-General (Balkan
Energy Ghana Ltd &Ors Interested
Parties) [2011] 2 SCGLR 1183 at
pp 1190-1191
Tuffuor v Attorney-General
[1980] GLR 637
New Patriotic Party v Attorney
General (31st
December Case) [1993-94] 2 GLR
35
Buchanan & Co Ltd v Babco
Forwarding & Shipping UK Ltd
[1977] 1 All ER 518
Ghana Lotto Operators
Association v National Lottery
Authority [2007-2008] 2 SCGLR
1088
Asare v Attorney-General
[2003-2004] SCGLR 823,
BOOKS REFERRED TO IN JUDGMENT
Purposive Approach to
Interpretation by Lord Denning
Butterworths, 1985, at pp 93-98
The Law of Interpretation in
Ghana ; (Exposition & Critique),
1995 p 277.by Bimpong Buta
DELIVERING THE LEADING JUDGMENT
AKUFFO C J:
COUNSEL
DR. DOMINIC A. AYINE WITH HIM
GODWIN TAMEKLO FOR THE
PLAINTIFFS.
GODFRED YEBOAH DAME, DEPUTY
ATTORNEY GENERAL WITH HIM VIVIAN
OPOKU AGYAKWA, SENIOR STATE
ATTORNEY FOR THE DEFENDANT.
AKUFFO CJ:-
Background
By a Writ of Summons, issued 27th
December, 2017, the
Plaintiffs suing in their
capacity as citizens of Ghana,
for the interpretation and
enforcement of the Constitution,
pursuant to articles 2(1)(b) and
130(1)(a), claimed the following
reliefs from this Court -
“1. A declaration that
upon a true and proper
interpretation of article 252
clause 2 of the Constitution,
neither Parliament nor the
Minister responsible for Finance
may allocate an amount that is
less than five per cent (5%) of
the total revenues of Ghana to
the District Assemblies Common
Fund;
“2. A declaration that
upon a true and proper
interpretation of article 252
clause 2 of the Constitution,
sections 3(2), 3(5) and 7 of the
Earmarked Funds Capping and
Realignment Act, 2017 (Act 947)
and Section 126(2) of the Local
Governance Act, 2016 (Act 916),
to the extent that they purport
to limit the proportion of
revenue to be allocated to the
District Assemblies Common Fund
to tax revenue and not total
revenue, are inconsistent with
and in contravention of the
Constitution and are thus null
and void and of no effect
whatsoever;
“3. A declaration that
the exclusion of the District
Assemblies Common Fund in the
disbursement of benchmark
revenue from oil operations as
provided for under sections 3,
16 and 21 as well as the First
Schedule of the Petroleum
Revenue Management Act, 2011
(Act 815) as amended is
unconstitutional and therefore
null and void;
“4. An order directed at
the Defendant to take steps to
ensure compliance with the
letter and spirit of the
Constitution encapsulated in
article 252 clause 2; and
“5. Any other order or
orders as this Honourable Court
may deem fit in the
circumstances.”
The facts giving rise to this
action are common cause between
the parties and are coherently
and concisely set out in the
Defendant’s Statement of Case as
follows:
a. Article 252(1) of the
1992 Constitution established
the District Assembly Common
Fund (DACF) and Article 252(2)
mandates Parliament to make
annual provision for the
allocation of not less than five
percent (5%) of the total
revenue of Ghana to District
Assemblies for development, to
be paid into the District
Assemblies Common Fund
(hereinafter referred to as ‘the
DACF’) in quarterly
installments.
b. Towards the
implementation of the provisions
of Article 252, Parliament
passed the District Assemblies
Common Fund Act, 1993 (Act 455),
Section 17 of which defined
total revenue as revenue
collected by or accruing to the
Central Government other than
foreign loans, grants, non-tax
revenue and revenues already
collected by or for District
Assemblies under any enactment
in force.
c. Subsequently, in
2016, Parliament passed the
Local Governance Act, 2016 (Act
936) which repealed the District
Assemblies Common Fund Act, 1993
(Act 455). Section 126(2), of
Act 936 provides that the total
revenues of the country includes
the revenues collected by or
accruing to the Central
Government other than foreign
loans and foreign grants,
non-tax revenue, petroleum
revenue paid into the Petroleum
Holding Fund under section 3 of
the Petroleum Revenue Management
Act, 2011 (Act 815) and revenues
already collected by or for the
District Assemblies under any
enactment.
d. Furthermore, section
234 of Act 936, defined “total
revenue” as the entire revenue
collected by or accruing to the
Central Government other than
foreign loans, grants, non-tax
revenue and revenues already
collected by or for a District
Assembly under an enactment.
e. Additionally,
Parliament passed the Earmarked
Funds Capping and Realignment
Act, 2017 (Act 947), which puts
a cap on all earmarked funds
including DACF as specified in
the Schedule to that Act.
f. The objective of
this Act is to ensure that all
Earmarked Funds specified in the
said Schedule is twenty-five
percent of tax revenue, which
the Minister of Finance must
ensure is allocated to the
Earmarked Funds specified in the
Schedule, each according to a
weight approved by Parliament as
part of the Annual Budget for
each fiscal year and each
Earmarked Fund must be adjusted
accordingly. By section 3(5) of
Act 947, however, the Minister
of Finance is enjoined to comply
with any quantum of revenue
allocation or retention of
Internally Generated Funds that
is provided for under the
Constitution.
g. In December 2017, the
Ministry of Finance presented
the Budget Statement and
Economic Policy of the
Government of Ghana for 2017
Financial Year to Parliament. In
the budget, the total revenue
including oil tax revenues was
stated as amounting to GH¢
34,382,052,975.00
h. Thereafter, by the
Appropriation Act (No. 1), 2017,
(Act 945), enacted to execute
the said budget, an amount of
GH¢ 1,575,935,339.00 was
allocated to the DACF
The crux of the Plaintiffs’
complaint herein is that the
amount allocated under Act 945
(i.e. the 2017 Appropriation
Act) to the DACF was not 5% of
the total revenue of that year.
Rather, the Plaintiffs alleged
that the Finance Minister, in
calculating the allocation for
the DACF, excluded non-tax
revenue and oil revenue in
reliance on the provisions of
Acts 815, 916 and 947. According
to the Plaintiffs, these
provisions are inconsistent with
and in contravention of Article
252(2) of the Constitution, and
are, thus, unconstitutional and
void.
ISSUES FOR DETERMINATION
Pursuant to the Memorandum of
Agreed Issues filed by the
Parties, on 31st July, 2018, the
following issues were set down
for determination;
i.
“Whether or not upon a true and
proper interpretation of article
252(2) of the Constitution the
term “total revenues” means all
revenues irrespective of source;
ii.
“Whether or not upon a true and
proper interpretation of the
Constitution sections 3(2), 3(5)
and 7 of the Earmarked Funds
Capping and Realignment Act,
2017 (Act 947) and section
126(2) of the Local Governance
Act 2016 (Act 916) are
inconsistent with Article 252(2)
of the Constitution to the
extent that the said statutes
purport to limit the proportion
of revenue to be allocated to
the District Assemblies Common
Fund to tax revenue;
iii.
“Whether or not the purported
exclusion of the District
Assemblies Common Fund from the
disbursement formula of
benchmark revenue from oil
operations as provided for in
sections 3, 16 and 21 as well as
the First schedule of the
Petroleum Revenue Management Act
2011 (Act 815) is inconsistent
with or in contravention of the
Constitution.”
JURISDICTION
The original jurisdiction of
this Court being a special one,
whenever it is invoked, it must
be evident that the matter falls
within the parameters set by the
Constitution and as clarified in
several decisions of the Court,
such as Ghana Bar Association
v Attorney General and Another
[2003-2004] 1 SCGLR 250, Bimpong
Buta v General Legal Council
[2003-2004] 2 SCGLR 1200, 2SCGLR
1038 and Abu Ramadan v Electoral
Commision Writ No.J1/14/2016.
The position of the law, as
expounded in the cases cited
above is that, inter alia, the
existence of an ambiguity or
imprecision or lack of clarity
in a provision of the
Constitution is a precondition
for the invocation and exercise
of the original interpretative
jurisdiction of this Court.
Where the words of a provision
are precise, clear and
unambiguous, or have been
previously interpreted by this
Court, its exclusive original
interpretative jurisdiction
cannot be invoked or exercised.
This is important for ensuring
that the special jurisdiction is
not needlessly invoked and
misused in actions that, albeit
dressed in the garb of a
constitutional action, might be
competently determined by any
other court. Consequently, it
has become our practice that in
all actions to invoke our
original jurisdiction, whether
or not a Defendant takes
objection to our jurisdiction,
or even expressly agrees with
the Plaintiff that our
jurisdiction is properly
invoked, we take a pause to
determine the question of the
competence of the invocation of
our jurisdiction, before
proceeding with the adjudication
of the matter or otherwise.
In this case, the Plaintiff is
effectively calling upon the
Court to interpret and give
effect to the meaning of Article
252(2) of the Constitution. The
Defendant did raise an objection
to the invocation of the Court’s
jurisdiction, arguing that there
is nothing ambiguous, imprecise
or unclear about the expression
“total revenues”.
The Defendant’s argument was
that the Plaintiffs failed to
establish that, ‘total
revenue’ as used in the
Constitution refers to both tax
and non-tax revenue, and that
the Constitution did not provide
any definition for the phrase,
neither is any reference made to
it in the Report of the
Committee of Experts.
Additionally, the Defendant
argues that a careful reading of
the Plaintiffs reliefs, reveals
that the issue of interpretation
does not arise save that the
exclusion of certain revenues by
Parliament, including petroleum
revenue from the ‘total revenue’
is inconsistent with what
constitutes total revenue under
Article 252 (2). The Defendant
contended that, as is clear from
articles 176 and 181(3)(4),
Parliament is vested with the
power to exclude certain
categories of public funds from
the ‘total revenue’
Having perused the Statements of
Case filed by both parties, it
is evident from the Memorandum
of Agreed Issues, which issues
arise from the Statements of
Case filed by the Parties, that
the meaning and scope of the
expression“total revenues of
Ghana” as it appears in
Article 252(2), is unclear and
requires interpretation by the
Court. The meaning of the words
is essential for a full
understanding of the manner in
which revenue is to be
apportioned to the DACF and,
depending on the interpretation
of “total revenues of Ghana”,
the impugned statutory
provisions may either be held to
be constitutional or
unconstitutional.
The Plaintiffs’ Case
The Plaintiffs argue that the
apportionment made by both
Parliament and the Executive in
the disbursement of financial
resources to the DACF results in
resource transfers which are
below the constitutional minimum
of 5 % of total revenues of
Ghana. According to the
Plaintiffs, whether one applies
the plain meaning approach, or
the purposive approach, of
interpretation, “total revenues
of Ghana”, can only refer to the
sum-total of public monies
collected by the government in
the course of its operations.
They contend that, from the
choice of words used, the
framers of the Constitution
intended that 5% of all
the revenue accruing to the
government is required to be
allocated to the DACF and that,
had the framers intended any
part of the revenue to be
excluded, it would have been so
expressed in the Constitution.
Plaintiffs, further, contended
that the purpose of the
provision was to ensure that
there would be a constant flow
of funds to guarantee a sound
financial base for the
operations of the type of local
government system established by
the Constitution. They submitted
that the words “total revenues
of Ghana”, having been used in
the Constitution, any
interpretation or application of
those words by Parliament must
accord with the objectives
intended by the framers of the
Constitution. Rather, according
to the Plaintiffs, the outcome
of the interpretation given to
‘total revenue’, by the various
legislative provisions,
particularly the Local
Governance Act, the Earmarked
Funds Capping and Realignment
Act and the Petroleum Revenue
(Management) Act, is the
exclusion of classes of revenue,
such as non-tax revenue and
petroleum revenues, from the
ambit of ‘total revenues of
Ghana’. In the view of the
Plaintiffs, the net result is
that the DACF has been deprived
of essential funds for local
governance and development,
contrary to what the framers of
the Constitution intended or
otherwise envisaged.
Hence, the Plaintiffs submitted
that the provisions that exclude
non-tax revenue and oil revenue
from the application of ‘total
revenue of Ghana’ for the
purpose of calculating the 5%
for the DACF are in violation of
the Constitution and ought to be
struck down.
The Plaintiffs argued, in the
alternative, that, if Parliament
might be said to have power to
exclude some sources of
government revenue from the
calculation of the allocation
due to the DACF, then there must
be a compelling rationale for
excluding any particular source
of revenue. Hence, in this
regard, they contend that the
exclusion of petroleum revenue,
which is a natural resource, is
arbitrary since revenue from
solid natural resources is
included in the allocation to
the DACF.
The Defendant’s Case
The Defendant appears to agree
that “total revenues of Ghana”
Article 252(2) refers to all
sources of revenue accruing to
the state but contends that the
provision has been made subject
to other provisions of the
Constitution. The Defendant
therefore drew attention to the
fact that certain provisions of
the Constitution confer on
Parliament the power to
determine what constitutes
“total revenues of Ghana”.
According to Defendant, Articles
176(2) empowers Parliament to
determine ‘total revenue’ and
that is exactly what Parliament
did in the provisions of the
statutes Plaintiffs are
complaining about. The
Defendant, therefore submitted
that, upon a true and proper
construction of Article 181(3) &
(4), Parliament is justified in
excluding loans contracted by
the government from total
revenue for the purpose of
allocation to the DACF because
such loan funds are usually
contracted for specific purposes
stated in the loan agreements.
Thus, according to the
Defendant, it is the very same
Constitution, which establishes
the DACF, that authorizes
Parliament to take out certain
sources from the total revenue.
Therefore, the provisions in
that regard are constitutional.
Analysis
We shall first consider the
argument of the Defendant that
Articles 176(2) empowers
Parliament to determine what
constitutes “total revenues of
Ghana” for purposes of Article
252(2). The provisions of the
article are as follows:
“176. (1) There shall be paid
into the Consolidated Fund,
subject to the provisions of
this article –
(a) all revenues or other monies
raised or received for the
purposes of, or on behalf of,
the Government; and
(b) any other monies raised or
received in trust for, or on
behalf of, the Government,
(2) The revenues or other monies
referred to in clause (1) of
this article shall not include
revenues or other monies –
(a) that are payable by or under
an Act of Parliament into some
other fund established for
specific purpose; or
(b) that may, by or under an Act
of Parliament, be retained by
the department of government
that received them for the
purposes of defraying the
expenses of that department.”
(Emphasis added)
In principle, one cannot gainsay
the Defendant’s submission that,
because Article 252(2) is
expressed to be subject to the
Constitution, any provision of
the Constitution which might be
interpreted to place a
limitation on the words of the
Article ought to be held to
qualify the said Article.
However, as is patently clear,
the part of the Article 176(2)
relied on by the Defendant does
not limit and cannot be taken as
limiting, the scope of the words
used in Article 252(2). The
provisions of Article 176(2) are
concerned with custody of
revenue and monies raised or
received by the government and
stipulates that they shall be
paid into the Consolidated Fund
or such specific purpose funds
as Parliament may establish. As
to how the monies that are paid
into the Consolidated Fund and
the funds Parliament may
establish are to be applied, the
Article does make any provision.
Provisions on the utilization of
monies in the Consolidated Fund
are set out in other parts of
the Constitution. For example,
by article 127(4) of the
Constitution, all administrative
expenses of the judiciary
including emoluments shall be
charged on the Consolidated
Fund. The monies in the specific
purpose funds that Parliament
may establish would be applied
in the manner Parliament
provides in the statutes that
set them up. An instance of such
fund and its usage is as set out
in Section 2 of the Road Fund
Act, 1997 (Act 536), which
provides that monies in the fund
shall be applied for routine and
periodic maintenance and
rehabilitation of public roads.
Where Parliament establishes any
fund, it has a discretion to
determine the sources of
government revenue, and the
percentage thereof, that shall
be paid into such fund. Thus, as
a further example, Parliament,
by Section 3(a) of the Ghana
Education Trust Fund Act, 2000
(Act 581) has established that
2.5% of value added tax receipts
is to be paid into the GETFUND.
Pursuant to Article 176(2),
Parliament may even set up a
specific purpose fund and impose
a levy specifically for that
fund as in the case of the
National Insurance Levy provided
for by Section 78(a) of the
National Health Insurance Act,
2003 (Act 650).
However, it is the Constitution
itself that established the
DACF, and it has specifically
provided for the source of money
and determined the minimum
percentage that shall be
apportioned to it. From the
language of Article 252(2),
therefore, although Parliament
may increase the percentage to
be paid into the DACF,
Parliament has no discretion in
respect of the source of money
and the minimum percentage.
Article 252 provides that;
(1) There shall be a fund to be
known as the District Assemblies
Common Fund.
(2) Subject to the provisions of
this Constitution, Parliament
shall annually make provision
for the allocation of not less
than five percent of the total
revenues of Ghana to the
District Assemblies for
development; and the amount
shall be paid into the District
Assemblies Common Fund in
quarterly installments.
(3) The monies accruing to the
district Assemblies in the
Common Fund shall be distributed
among all the District
Assemblies on the basis of a
formula approved by Parliament.
(4) There shall be appointed by
the President with the approval
of Parliament, a District
Assemblies Common Fund
Administrator.
(5) Parliament shall by law
prescribe the functions and
tenure of office of the
Administrator in such a manner
as will ensure the effective and
equitable administration of the
District Assemblies Common Fund.
Clearly, it was not the District
Assemblies Common Fund Act, 1993
(Act 455)
that established the DACF and
the impression created in the
legal submissions of the
Defendant is totally erroneous.
The DACF is a creature of the
Constitution; what Article
252(3) &(5) of the Constitution
required of Parliament, in
respect of the DACF, was to
prescribe the functions and
tenure of the Administrator of
the Fund, provide for the
efficient management of the Fund
and regulate its equitable
distribution, nothing more. The
Constitution empowered
Parliament to determine the
formula for distribution of the
monies in the DACF. If it was
intended that Parliament shall
determine the ambit of ‘total
revenues of Ghana’, Article 252
would have so provided in.
Hence, when Parliament in
Section 17 of Act 455 purports
to define “total revenues”,
which term the Constitution
itself used in Article 252(2),
Parliament, in truth, exceeded
the power the Constitution
conferred on it by Article
252(5). The constitutionally
mandated authority to define the
scope of total revenues as used
in Article 252(2), where the
same has not been defined by the
Constitution itself, is the
Supreme Court, albeit that until
this suit, no one had sought
such judicial interpretation of
the expression.
It would be straining the
meaning of the provisions in
Article 176(2) to say that they
empowered Parliament to
determine what sources of
Government revenue would
constitute total revenues of
Ghana for purposes of Article
252(2). In our view that
argument of the Defendant is not
supported by a true
interpretation of Articles 176
and 252(5) when read together.
We therefore reject that
argument. To do otherwise would
overstretch the scope of article
176(2) and do damage to the
effectiveness of Article 252(2).
It would create uncertainty and
would empower Parliament to
alter, at will, the sources of
monies for the DCAF, thus
placing into jeopardy the
community viability and
development at the local
government level, intended to be
assured by the constitutional
establishment of a specifically
sourced fund for effective local
governance.
In interpreting “total revenues
of Ghana” we need to advert our
minds to the question whether,
in the choice of those words in
Article 252(2), the framers of
the Constitution intended that
every conceivable revenue
accruing to the government of
Ghana ought to be included in
the calculation of the ‘not less
than 5%’ for the DACF? Might the
framers be said not to have
intended it to cover some of the
sources of revenue that
Parliament has sought to exclude
by the impugned provisions?
Stated differently, what is the
intended scope of the words. See
Republic v High Court
(Commercial Division), Accra: Ex
Parte Attorney-General (Balkan
Energy Ghana Ltd &Ors Interested
Parties) [2011] 2 SCGLR 1183 at
pp 1190-1191.
In order to answer the first
question we need to examine the
principles of interpretation of
a constitutional document, such
as we have, which is expected to
direct the affairs of a nation
for all time; the present as
well as the future. It now a
crystalised principle that the
Constitution must be read as a
whole and construed purposively
with an eye into the future. In
delivering the judgment of the
Court in Tuffuor v
Attorney-General [1980]
GLR 637 at pages 647-648,
Sowah JSC (as he then
was) stated as follows:
“A written Constitution such as
ours is not an ordinary Act of
Parliament. It embodies the will
of a people. It also mirrors
their history. Account,
therefore, needs to be taken of
it as a landmark in a people's
search for progress. It contains
within it their aspirations and
their hopes for a better and
fuller life...The Constitution
has its letter of the law.
Equally, the Constitution has
its spirit. It is the
fountain-head for the authority
which each of the three arms of
government possesses and
exercises. It is a source of
strength. It is a source of
power. The executive, the
legislature and the judiciary
are created by the Constitution.
Their authority is derived from
the Constitution. Their
sustenance is derived from the
Constitution. Its methods of
alteration are specified. In our
peculiar circumstances, these
methods require the involvement
of the whole body politic of
Ghana. Its language,
therefore, must be considered as
if it were a living organism
capable of growth and
development indeed, it is a
living organism capable of
growth and development, as
the body politic of Ghana itself
is capable of growth and
development. A broad and liberal
spirit is required for its
interpretation. It does not
admit of a narrow
interpretation. A doctrinaire
approach to interpretation would
not do. We must take account of
its principles and bring that
consideration to bear, in
bringing it into conformity with
the needs of the time.”
[Emphasis added]
His Lordship continued at page
648:
“And so a construction should be
avoided which leads to
absurdity. And when a particular
interpretation leads to two,
shall we say "inconsistent"
results, the spirit of the
Constitution would demand that
the more reasonable of the two
should be adhered to. We must
have recourse to the
Constitution as a whole.”
[Emphasis added]
In his opinion in support of the
majority decision of the Supreme
Court in the landmark case of
New Patriotic Party v
Attorney General (31st
December Case) [1993-94]
2 GLR 35, Francois JSC opined at
pages 79-80:
“My own contribution to the
evaluation of a Constitution is
that, a Constitution is the
out-pouring of the soul of the
nation and its precious
life-blood is its spirit.
Accordingly, in interpreting the
Constitution, we fail in our
duty if we ignore its spirit.
Both the letter and the spirit
of the Constitution are
essential fulcra which provide
the leverage in the task of
interpretation…In every
case, a true cognition of the
Constitution can only proceed
from the breadth of
understanding of its spirit…The
necessary conclusion is that
the written word and its
underlying spirit are
inseparable bedfellows in the
true interpretation of the
Constitution.” [Emphasis
added]
“All it means is that the judges
do not go by the literal meaning
of the words or by the
grammatical structure of the
sentence. They go by the
design or purpose which lies
behind it. When they come upon a
situation which is to their mind
within the spirit - but not the
letter - of the legislation
they solve the problem by
looking at the design
and purpose of the
legislation- at the effect it
was sought to achieve. They
proceed then to interpret the
legislation so as to produce the
desired effect…”[emphasis
supplied]
Lord Denning expressed strong
support for the Purposive
Approach to Interpretation in
his book, “The Closing
Chapter” Butterworths, 1985,
at pp 93-98. A portion of his
views is quoted by Bimpong Buta
in his book, “The Law of
Interpretation in Ghana;
(Exposition & Critique), 1995 p
277.
The memorandum to the
Interpretation Act 2009 (Act
792) has given legal
backing to the ‘living
constitutionalist’ approach to
interpretation. It provides
that:
“By that process the
construction and interpretation
of the constitution, 1992, will
not be tied down by the
Interpretation Act but will take
account of the cultural,
economical, political and social
development of the country
without recourse to amendments
which can be avoided if the
spirit of the Constitution is
given its due prominence. The
Constitution is a sacred
document. It must of necessity
deal with facts of the
situation, abnormal or usual.
It will grow with the
development of the nation and
face challenging changes and new
circumstances. It must be
allowed to germinate and develop
its own peculiar conventions
and constructions not hampered
by niceties of language and form
that would impede its singular
progress.” [Emphasis added]
Thus this Court, per Date-Bah,
JSC, in the case of Ghana
Lotto Operators Association v
National Lottery Authority
[2007-2008] 2 SCGLR 1088
stated as follows:
“A more modern approach would be
to see the document as a living
organism. As the problems of
the nation change, so too must
the interpretations of the
Constitution by the Judiciary.
Interpreting the Constitution as
a living organism implies that
sometimes there may be a
departure from the subjective
intention of the framers of it.
The objective purpose of the
Constitution may require an
interpretation different from
that of the original framers of
it.”
In Asare v
Attorney-General
[2003-2004] SCGLR 823, at
pages 834 and 844, Date-Bah JSC
distinguished between the
subjective purpose and objective
purpose of the Constitution as
follows:
“The subjective purpose of a
constitution or statute is the
actual intent that the authors
of it, namely the framers of the
constitution or the legislature,
respectively, had at the time of
the making of the constitution
or the statute. On the other
hand, the objective purpose is
not what the author actually
intended but rather what a
hypothetical reasonable author
would have intended, given the
context of the underlying legal
system, history and values, etc
of the society for which he is
making law. This objective
purpose will thus usually be
interpreted to include the
realization, through the given
legal text, of the fundamental
or core values of the legal
system...”
Reading Articles 240 and 252
together, and taking note of the
fact that these articles have
been entrenched by the framers
of the Constitution in Article
290(1)(o), the purpose of the
provision is clearly to assure
sound system of local government
and administration, whose core
feature is viable
decentralization. The article
is, therefore, intended to
guarantee adequate financial
resources to the Assemblies and
to create firm foundations for
growth at the local government
level, unlike what pertained in
the period prior to this
Constitution when every
development was initiated from
the Central Government.
Armed with the abovementioned
principles of constitutional
interpretation, we are of the
view that the framers of the
Constitution did not by Article
252(2) intend that every
conceivable revenue ought to be
added in the calculation of the
allocation to the DACF.
Having answered the first of the
two questions in the negative,
our next task is to determine
the scope of “total revenues of
Ghana” with reference to the
particular sources of revenue
excluded by the impugned
provisions.
“Total revenues of Ghana” must,
prima facie, refer to the total
revenues and monies that accrue
to the central government in any
given year over which the
government has a discretion as
to how to apply same for its
operations. ‘Government’ ass
used here to includes the
legislature and not limited to
the executive arm of government
as defined in Article 295 of the
Constitution.
The statutory provision that has
suffered the greatest attack
from the Plaintiffs is section
126 of Act 963 which provides as
follows :
“The total revenues of the
country includes the revenues
collected by or accruing to the
central Government other than
foreign loans and foreign
grants, non-tax revenue,
petroleum revenue paid into the
Petroleum Holding Fund under
section 3 of the Petroleum
Revenue Management Act, 2011
(act 815) and revenues already
collected by or for District
Assemblies under any enactment”
We believe that it is useful, at
this juncture to take each
excluded source of excluded
revenue and ascertain whether or
not such exclusion is justified.
Petroleum Funds.
The Local Government Act in
defining total revenue for
purposes of the DACF excluded
all forms of petroleum revenue
the management of which was
provided for in the Petroleum
Revenue Management Act, 2011
(Act 815). We read the statement
of case of the Defendant closely
to see if any policy
justification was provided for
the exclusion of petroleum
revenue but we did not find any.
In the course of arguing this
case, only one justification,
based on a legal ground, has
been urged on us, ie that
Parliament has been given
authority by Article 176(2) to
determine what constitutes total
government revenues for purposes
of calculating the allocation to
the DACF. We have already
rejected that argument so it
means the Defendant has no
justification for this far
reaching provision.
Petroleum is a non-renewable
natural resource, which Ghana
only recently started producing
in commercial quantities. Such
production commenced long after
the coming into effect of the
Constitution. On the other hand,
before the Constitution was
promulgated, Ghana had a long
history of generating and
receiving revenue from mining of
solid minerals which are also
non-renewable and had been
making investments towards the
production of petroleum in
commercial quantities. As the
plaintiffs rightly contended,
there can be no justification
for interpreting total revenues
of Ghana to include revenues
from solid minerals but exclude
revenues from petroleum. We note
that the Constitution employs
the plural of the word and
states total “revenues”. That
means that unless some other
provision of the Constitution
might be said to intend
exclusion of a source of
revenue, which is not so, we
hold that the reference to total
revenues of Ghana included
revenues from all natural
resources including petroleum
revenue.
This holding does not diminish
the laudable objectives and
scheme in the Act for petroleum
revenue management aimed at
ensuring that the nation obtains
optimal benefits from its
petroleum resources.
Nevertheless, the Constitution
has directed that part of the
revenue from petroleum shall be
paid to the DACF to improve the
financial strength of the
District Assemblies to engender
development at that level. By
the scheme of revenue management
adopted in Act 815, it does
appear to us that not all the
funds established under the Act
are inconsistent with the scope
of Article 252(2) as we have
construed it, and as is clear
from the following analysis:
• Petroleum Holding
Fund.
This fund, which is established
by Section 2 of Act 815, is only
the receptacle of all petroleum
revenue and we find nothing
wrong with keeping the revenue
separate as this would
facilitate proper accounting.
• Ghana Petroleum
Funds.
These are the Heritage Fund and
the Stabilisation Fund
established by Sections 10 and
11 respectively of the Act. The
Heritage Fund is intended to
support development by future
generations of Ghana so as to
prevent dissipation within a few
generations. The interest
accruing on it may be drawn upon
and used for budgeted
expenditure of the country in
intervals of fifteen years.
Similarly, the Stabilisation
Fund is a reserve of some of the
petroleum revenue to be drawn
from when oil prices fluctuate
and the revenue from petroleum
in any given year reduces below
expected levels. In our
understanding, the revenue in
the Ghana Petroleum Funds is not
available to the government to
be applied for its operations in
the year it is generated but it
will be made available in some
years to come. Now, Article
252(2) states that not less than
5% of total revenues shall be
paid annually into the DACF. In
our view, this can only refer to
revenue available for use by the
Government in any particular
year and not necessarily revenue
generated in that year.
Therefore, in thus hedging round
the unavailable funds, nothing
is lost to the DACF from the
Ghana Funds, since in years to
come the monies would definitely
be become available for use by
the Government, whereupon the
Article would apply to such
deferred revenues and not less
than 5% thereof will then become
payable to the DACF.
• Annual Budget
Funding Amount.
By Sections 16 and 17 of Act
815, on an annual basis, not
more than seventy percent of the
Benchmark Revenue received into
the Petroleum Holding Fund in
that year shall be transferred
into the Consolidated Fund to
support the national budget. It
is our view that this category
of the revenue forms part of the
total revenues of Ghana for the
year in question and,
consequently, not less than 5%
of it must be paid to the DACF.
The Plaintiffs have complained
that the DACF ought not to have
been excluded in the list of
areas of national development to
which the Annual Budget Funding
Amount shall be applied as
stated in Section 21 of Act 815.
Section 21(3) provides as
follows:
“(3) Where the long-term
national development plan
approved by Parliament is not in
place, the spending of petroleum
revenue within the budget shall
give priority to, but not be
limited to programmes or
activities relating to….”
It is thus plain that the areas
mentioned are to be given
priority consideration and that
they are not exclusive.
The provision that rather
invokes suspicion is Section 22
which is that;
“22. Outside of the allocation
of the Petroleum Holding Fund,
extra budgetary activities or
statutory earmarking of
petroleum revenue for any
consideration is prohibited.”
At first sight, it would appear
that Parliament sought to
prohibit allocation of petroleum
revenue to the DACF but on close
reading, the section refers to
statutory earmarked funds.
The DACF has been
constitutionally earmarked not
statutorily. Therefore it is
obvious that Parliament did not
exclude it.
Foreign Loans;
Article 181 (4) of the
Constitution provides, that the
terms and conditions of loans
either granted or raised by the
Government on behalf of itself
or any public institution shall
be placed before Parliament for
approval. This presupposes that
the framers of the Constitution
were aware that monies received
by the Government as loans would
definitely be subject to terms
and conditions including
specification of the projects to
which such loans must be
applied. The application of
monies from loans raised by the
Government are, therefore, not
entirely be at the discretion of
the Government. Consequently,
when the provisions in the
Constitution are construed as a
whole, the logical result would
be that the reference to total
revenues of Ghana in Article
152(2)was not intended to
include loans. In any case, the
budget statement for 2017 (as is
the case in other budgets) does
not capture loans under
revenues.
But, we notice from a reading of
the tables in the appendixes to
the 2017 budget, which provoked
this case, that in the figures
on financing of the budget,
there are differentiations among
foreign project loans, programme
loans and bonds. Our holding
above is in respect to loans
contracted within the purview of
Article 181 by or under the
authority of an Act of
Parliament for purposes of a
particular identified project or
program and does not exclude any
loan that is contracted to fund
the national budget in general
terms, such as government
treasury bills and bonds which
are issued to raise money to
finance regular government
activities.
Foreign Grants;
These are similar to loans to
the extent that the development
partner who gives a grant may do
so on terms and conditions as to
application of such monies, over
which the Government has no
discretion. Consequently, as we
have said with regard to foreign
loans, foreign grants do not
form part of total revenue for
purposes of Article 252(2)
provided that any foreign grant
that permits Government
discretion as to the application
of monies given shall not be
excluded from total revenue
under Article 252(2).
Non-tax revenue;
Prima facie, term non-tax
revenue means the monies
referred to are part of total
revenues. In fact, Section 8 of
Act 947 defines it as follows:
“is the recurring income
earned by Government from
sources other than taxes and
grants”. This comprises of
revenue from goods and services
provided by the government;
fees, penalties and fines;
income from business ventures
and investments by government;
rent income and royalties. These
are regular sources of revenue
for government the application
of which government has
discretion to determine. In the
circumstances, non-tax revenue
was certainly in the
contemplation of the framers of
the Constitution when they
provided that not less than 5%
of the total revenue of Ghana be
paid into the DACF.
As the Defendant rightly argues,
what is known as internally
generated funds of various
government departments come
under non-tax revenue. This,
from the above holding might be
seen as part of total revenues,
except that, in the case of
retained internally generated
funds, the Constitution makes a
provision which, in our
understanding, limits the words
“total revenues of Ghana’ in
Article 252(2). It is provided
by Article 176(2)(b) that the
department of government that
receives monies that would
normally form part of government
revenue may, by the authority of
Parliament, retain part of such
monies received for the purposes
of defraying the expenses of
that department. The Government
has over the years, implemented
this provision by authorizing
retention by departments of a
percentage of internally
generated funds. Therefore, the
Constitution having authorized a
particular use to which such
monies (for defraying expenses
of the collecting department)
are to be applied, must have
intended that such retained
funds would not form part of the
total revenue of government for
the purposes of Article 252(2).
The distinction between clause
2(a) and 2(b) of Article 176 is
that, whereas in clause 2(a) the
Constitution talks only of the
custody of the revenue, in
clause 2(b) it directs a
particular use to which the
revenue shall be put.
In the light of the foregoing
analysis, the portion of non-tax
revenue that is paid to central
government forms part of total
revenues for calculating the
portion due for payment into the
DACF.
The Plaintiffs also complain
about the Earmarked Funds
Capping and Realignment Act,
2017 (Act 947), which in
Section 1 states that
follows;
“1(1) This Act applies to
Earmarked Funds
(2) Where a provision in an
enactment relating to an
Earmarked Fund or an Internally
Generated Fund is inconsistent
or conflicts with a provision of
this Act this Act shall
prevail.”
The objects of the Act are spelt
out in Section 2 thereof as
follows;
“Objects
2. The objects of this Act are
to
(a) provide a cap on the
Earmarked Funds specified in the
Schedule to ensure that the
revenue encumbered by the
Earmarked Funds as a result of
allocations is twenty-five
percent of tax revenue; and
(b) empower the Minister in,
consultation with the relevant
sector Minister, to review the
enactment under which the
Earmarked Funds specified in the
Schedule are established, and to
make a determination as to
whether or not a particular
Earmarked Fund has outlived its
purpose.”
Number 5 on the Schedule
referred to in the Act is the
DACF. The complaint of the
plaintiffs in this regard is
that, if the DACF is added to
all the statutory Earmarked
Funds and made to share
twenty-five percent of annual
tax revenue, the amount to be
allocated to the DACF is likely
to be lower than what the
Constitution directed in Article
252(2).
It is clear that the primary
defect in this Act is Section
1(2) which stipulates that the
Act prevails over any
inconsistent “enactment”. The
term enactment includes a
provision of a constitution and
if by use of the term here
Parliament intended that the Act
prevails over inconsistent
provisions of the Constitution,
then without any doubt it is
fundamentally wrong. An Act of
Parliament which is later in
time may expressly or impliedly
amend an inconsistent provision
in an earlier Act. No Act of
Parliament that postdates the
Constitution can possibly be
taken to amend a provision of
the Constitution. We therefore
reiterate for the avoidance of
any doubt that the DACF was
established by the Constitution,
which determined the source of
money payable into it. It was
not established by an Act of
Parliament. Though Parliament
may amend certain provisions of
the Constitution, Article 252(2)
which set up the DACF is
entrenched and by Articles 290,
it cannot be amended without a
referendum.
Consequently, the inclusion of
the DACF in the Schedule to Act
947 is in contravention of the
constitution and the same is
unconstitutional, void and of no
effect. We, must emphasise
however, that this finding does
not make the rest of the Act
void. We have taken due note of
the desire of the Government to
free itself from the constraints
imposed on it by the statutory
earmarking of revenue which
leaves very little revenue for
general development of the
nation. The Government may
realign statutory earmarked
funds, but, certainly, it may
not do so to the constitutional
funds without amending the
relevant provisions of the
Constitution in accordance with
the dictates of the
Constitution.
For the avoidance of doubt, our
decision must not be interpreted
to mean that levies imposed by
Parliament to specifically
provide money for
specific-purpose funds, such as
the National Health Insurance
Levy under Act 650, the Energy
Sector Levy (ESLA) under Act 899
or Petroleum Products Levy under
Act 536; are to be treated as
forming part of total revenues
of Ghana for purposes of Article
252(2). Such levies could not
have been in the contemplation
of the framers of the
Constitution since they are not
regular and recurring sources of
revenue to government.
Conclusion
We, therefore, make the
following Orders:
1. Relief 1 endorsed in
the plaintiff’s writ of summons
is dismissed as upon a true and
proper interpretation of Article
252(2) “total revenues of Ghana”
does not encompass every revenue
no matter the source; we so
declare accordingly.
2. a) To the
extent that Sections 1(2),
2(b),3(1)(b),3(5)(a),7(a), and 8
of the Earmarked Funds Capping
and Realignment Act,2017(Act
947) and Section 126 of the
Local Governance Act, 2016 (Act
916) purport to limit the
proportion of revenue due for
allocation to the District
Assemblies Common Fund as
established by Article 252(2) of
the Constitution, the same are
in the contravention of the
Constitution and are hereby
declared to be null and void.
b) Consequently the
District Assemblies Common Fund
is hereby deleted from the
schedule to the said Act 947;
and the references to the Annual
Budget Funding Amount, provided
for by Section 16 and 18 of the
Petroleum Revenue Management Act
2011 (Act 815) from tax Revenue,
in Section 126 of the Local
Governance Act are hereby
deleted.
c) For avoidance of
doubt such amounts of Internally
Generated Funds that Parliament
has, pursuant to Article 176(2)
(b) authorized to be retained by
departments that receive them,
as provided for under Act 947,
remain valid and in effect.
3. Relief 3 is
dismissed.
4. Consequently, we
hereby direct that in
calculating the annual amount to
be allocated to the District
Assemblies Common Fund, the
Defendant shall comply strictly
with the provisions of Article
252(2) as construed and
interpreted in this judgment.
“Total Revenue of Ghana,’’ for
purposes of allocation to the
District Assemblies Common Fund
shall include Petroleum Revenue
allotted as Annual Budget
Support amount and non-tax
revenue paid to Central
Government. Total Revenues of
Ghana shall not include foreign
loans and grants, Petroleum
receipt paid into the Heritage
and Stabilization Fund, retained
Internally Generated Fund and
levies imposed by Parliament for
specific purposes under an Act
of Parliament.
S. A. B. AKUFFO
(CHIEF JUSTICE)
ADINYIRA (MRS), JSC:-
I agree with the conclusion and
reasoning of my sister Akuffo,
CJ.
S. O. B. ADINYIRA (MRS)
(JUSTICE OF THE SUPREME COURT)
DOTSE, JSC:-
I agree with the conclusion and
reasoning of my sister Akuffo,
CJ.
V. J. M. DOTSE
(JUSTICE OF THE SUPREME COURT)
BAFFOE-BONNIE, JSC:-
I agree with the conclusion and
reasoning of my sister Akuffo,
CJ.
P. BAFFOE-BONNIE
(JUSTICE OF THE SUPREME COURT)
GBADEGBE, JSC:-
I agree with the conclusion and
reasoning of my sister Akuffo,
CJ.
N. S. GBADEGBE
(JUSTICE OF THE SUPREME COURT)
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