#Budget review: Minority appeals to govt not to raise taxes

BY: Musah Yahya Jafaru
Ranking Member of the Finance Committee and Minority Spokesperson on Finance, Mr Cassiel Ato Forson
Ranking Member of the Finance Committee and Minority Spokesperson on Finance, Mr Cassiel Ato Forson

The Minority in Parliament has raised concerns about the intention of the government to increase taxes, saying such a move will worsen the plight of businesses and households.

It said the economy was already performing badly, with increasing inflation, a falling cedi and increases in fuel prices and transport fares which had resulted in hardships for the people.

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It, therefore, urged the government to rather widen the tax net and ensure compliance with revenue collection.

Speaking at a breakfast roundtable in Accra on Monday, the Ranking Member of the Finance Committee and Minority Spokesperson on Finance, Mr Cassiel Ato Forson, said: "The current crisis confronting the managers of the economy, compelling them to impose a raft of heavy taxes on the already burdened populace, is self-imposed.”

Mr Forson, who was flanked by the Minority Leader, Mr Haruna Idrissu, and the Deputy Minority Leader, Mr James Avedzi, said instead of a clear programme to address the concerns facing Ghanaians, including the challenges confronting the health sector, the government had rather chosen to compound the suffering of Ghanaians by introducing more taxes, "after making a song and a dance out of the removal of supposed nuisance taxes”.


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"These taxes will no doubt hit Ghanaian households and businesses very hard and further erode their already dwindling disposable incomes. All this is happening at a time of great waste and profligacy by the government.

"The argument is if you say you are going to increase Value Added Tax (VAT) from 17.5 per cent to 21.5 per cent, it means you are increasing the rate of taxes. But we had the opportunity as a country to broaden the base for financial services and real estate. That would have brought about half of what you intended to increase. But because of populace politicking, you decided to exempt them and rather increase taxes. That is mismanagement of our fiscal regime," he said.

The Minister of Finance, Mr Ken Ofori-Atta, is scheduled to present the mid-year budget review in Parliament next Thursday. Even before then, the business community and the political class are anxious about the presentation because of expected increases in taxes.

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The anxiety is fuelled by a post on the Facebook page of a leading member of the New Patriotic Party (NPP) and former Director of the Danquah Institute, Mr Gabby Asare Otchere-Darko, which seemed to lend support to speculations about an increase in the VAT rate.

But Mr Ofori-Atta remains tight-lipped over the possibility of an increment in taxes.

IMF approval

Mr Forson said the government's intention to increase taxes was to encourage the International Monetary Fund (IMF) to approve the fourth and fifth reviews of the country's programme with the fund.

He said it was captured in the document of the Board of the IMF which was published on the fund’s website.

Economy suffering

Mr Forson said the fiscal problem in the country was the direct result of shallow opportunism and populism.

He said it was obvious that the promises made by the NPP in 2016 and the government’s initial actions, as contained in the 2017 budget, were intended only to get the party elected and convey an impression of fidelity to those promises.

"The reality, however, is that it has led to major problems for the economy which have translated into severe hardships for the generality of our people," he said.

For instance, he said, inflation had begun rising again and was now in double digits following a fleeting stay at single digits in the last two months or so.

Besides, he said, the Ghana cedi continued its catastrophic nosedive and was showing no sign of improvement, despite lofty talk from the government and the Bank of Ghana.

"It is currently trading at GH¢4.8 to the dollar and appears almost set to reach GH¢5 to the dollar if the trend is not curbed immediately. This has in turn led to steep rises in the prices of goods and services, leading to more hardships for the people. Fuel prices have increased astronomically, as have transport fares.

"Key campaign promises like the One-district, One-factory, One-village, One-dam, among others, remain unfulfilled, with contradictory pronouncements from various government officials on the status of these projects the order of the day," he said.

Borrowing

Mr Forson said contrary to a promise not to borrow, the Akufo-Addo government was borrowing at break-neck speed and in alarming proportions.

He said almost two years in office, the government had borrowed nearly half of what the National Democratic Congress (NDC) government borrowed in eight years.

"More worryingly, they have virtually no serious capital investment to show for this level of borrowing, except a reckless dissipation of the borrowed funds on consumption, thereby saddling present and future generations with debt they will struggle to pay.

"This has come at a time when a major crisis is afflicting the health sector, where patients in critical need of health care are being turned away or treated in dehumanising conditions owing to severe congestion. This is made all the more problematic by the fact that apart from its inability to make any investment in the expansion of health infrastructure, the government has inexplicably decided to allow huge investments made by the Mahama administration in health infrastructure to rot away by refusing to either operationalise them or complete them," he said.

Mr Forson said Instead of a clear programme to address the concerns, the government had rather chosen to compound the suffering of Ghanaians by introducing more taxes.

"The conduct of the government clearly underscores the need to be wary of boastful politicians who tout capacities that they do not possess, promise heaven and deliver hell and, above all, are prepared to use the most disingenuous falsehoods and ruses to capture political power,” he said.

He said the dire situation should compel the government to apologise to Ghanaians for its deception and follow the advice of national leaders to organise a national forum to find solutions to problems caused by its mismanagement of the economy, leading to misalignment of the budget.

Other speakers

Mr Idrissu accused the government of not being sincere to Ghanaians because it promised to move from taxation to production but was now moving from taxation to taxation.

Mr Avedzi urged the government to factor the recommendations of the Minority in the expected Cabinet meeting on the mid-year review today.