Deputy Information Minister, Kojo Oppong Nkrumah wants Ghanaians to look out for the effectiveness of government’s fiscal policies when the Finance Minister presents its mid-year budget review Monday.
Kojo Oppong Nkrumah who is also the Ofoase-Ayirebi Member of Parliament (MP), wants attention to be focused especially on government’s revenue collection strategies.
He suggested the budget review will give a verdict on the effectiveness of the revenue collection policies of the former John Mahama government as against that of the Nana Akufo-Addo government.
Mahama’s Finance minister Seth Terkper and Akufo-Addo’s Finance minister Ken Ofori-Atta
The Finance Minister, Ken Ofori-Atta revisits parliament for the third time in 2017 to report on the performance of the NPP government’s first budget since it was sworn in last January.
The mid-year budget review is a constitutional directive contained in Section 28 of Public Financial Management Act.
The Finance Minister will later Monday, answer to the MPs questions like: “How are we doing on fiscal targets we set for ourselves? How are we doing on macroeconomic indicators? Are you going to revise any of the targets?….How is the outlook like?” the deputy Minister said.
Already, the government is set to miss its revenue target for the first quarter. The government raised ₵10 billion from domestic revenue as against the ₵12 billion target.
Revenue from taxes was ₵8.7billion, missing a target of ₵10 billion.
While the government is not collecting enough to meet its targets, it is also not spending as much as it had planned. The government had planned to spend almost ₵17 billion, it actually spent ₵13.4 billion by the end of April.
The missed revenue collection targets were predicted by the Minority which warned that the Akufo-Addo government’s plan to scrap taxes will hurt its ability to raise revenue.
The government passed the Customs Amendment Bill to scrap eight taxes and review about three more taxes as part of its plan to move away from taxation to production.
Scrapped and reviewed taxes
1 percent Special Import Levy;
– 17.5 percent VAT/NHIL on financial services;
– 17.5 percent VAT/NHIL on selected imported medicines, that are not produced locally;
17.5 percent VAT/NHIL on domestic airline tickets;
– 5 percent VAT/NHIL on Real Estate sales;
– Excise duty on petroleum; – Special petroleum tax rate from 17.5 percent to 15 percent;
– Duty on the importation of spare parts; – Levies imposed on head potters (kayayei) by local authorities;
– Taxation, the gains from realisation of securities listed on the Ghana Stock Exchange or publicly held securities approved by the Securities and Exchange Commission (SEC);
– Reduce National Electrification Scheme Levy from 5 percent to 3 percent;
– Reduce Public Lighting Levy from 5 percent to 2 percent;
– Replace the 17.5 VAT/NHIL rate with a flat rate of 3 percent for traders; and
– Implement tax credits and other incentives for businesses that hire young graduates
Vice-President hugs Finance minister Ken Ofori-Atta during the budget presentation last March.
Will tax reliefs justify Minority’s ‘jeopardy’ fears?
The Minority had warned of a “fiscal jeopardy” if the Finance minister persists in cutting taxes.
But Kojo Oppong Nkrumah argues it is possible to check the veracity of this claim by the Minority by checking the details of the Finance minister’s presentation.
He indicated that it is possible to draw a comparison between how much government collected using the excessive tax collection tools of the former government and the amount collected after some taxes were scrapped.
He said the effect of the Akufo-Addo government’s relaxed tax policies kicked in after April.
“What was the short fall in the collection in the first quarter of the year when the revenue measures available were revenue measures that were passed in 2016 and what has been the story since about let’s say April, May, June when the new revenue measures based on tax cuts introduced. Has there been a significant pick-up?”
“That for me will shows whether or not these tax cuts or revenue approaches have worked or failed”
The deputy Information Minister also revealed government will not be asking for more money although it missed its revenue collection targets.
He said the government will also not be revising its targets mid-year as has been the usual case in previous presentations.