Business News of Saturday, 4 March 2017
A renowned economist has given high marks to the 2017 budget statement of Nana Akufo-Addo’s administration but points out likely policy implementation challenges.
Dr Eric Osei-Assibey, a Senior Lecturer at the University of Ghana and a Fellow at the Institute of Economic Affairs (IEA), says the budget that was presented to Parliament on Thursday by Finance Minister, Ken Ofori-Atta, reveals that the current government is focused on spurring production, especially in the private sector.
Government’s plan to build a factor in all 216 districts of the country; a dam every ‘village’ across the country; allocate the cedi equivalent of $1 million to every constituency in the country to fight poverty; and a promise to make senior high school education free are among the numerous ambitious policies the budget sought to clarify.
Although the expectation prior to the budget presentation was that the government would outline strategies to improve revenue mobilisation to finance the many campaign promises, it was instead heavy on tax cuts.
The 2017 budget among other things, promised significant cuts in taxes: 1% Special Import Tax, market tolls paid by head porters, the 17.5% Value Added Tax/National Health Insurance Levy (VAT/NHIL) on financial services and the 17.5% VAT/NHIL on domestic airline tickets.
Also, the 2017 Budget Statement and Economic Policy, themed “Sowing the seeds for Growth and Jobs” has promised to abolish the 5% VAT/NHIL on real estate, import levies on spare parts, the 17.5 per cent VAT/NHIL on selected imported medicines not produced locally, replacing the 17.5 per cent VAT/NHIL with a 3% flat rate for traders on the Ghana Stock Exchange (GSE), as well as giving tax credits and other incentives to businesses that employ young graduates.
Speaking Saturday on Joy FM/MultiTV news analysis programme, Newsfile, Dr Osei-Assibey said “by and large it is a good budget,” but adds that “on the issue of how this budget will finance these initiatives that have been outlined, it is not going to be easy.”
He also said some of the tax abolishments, for instance, the removal of import taxes on spare parts, could lead to “unintended consequences”.
The Economist, however, said it would have been better if the government proposed taxes on spare parts that would feed into the development of its industrialisation drive, and not a blanket abolishment of taxes on all spare parts.
Dr Osei-Assibey adds that the government may have deliberately left out certain implementation details of some of the policies from the current budget, but may do so in subsequent budgets.