Dr John Kwakye, IEA
THE INSTITUTE of
Economic Affairs (IEA) has registered its displeasure at the tax approach
adopted by the Finance Minister to make up for government’s shortfall in revenue
for the second half of the year.
A senior
economist with the IEA, Dr John Kwakye, who addressed a press conference in
Accra yesterday, said: “To us, the minister’s approach was misplaced because
the tax increases will only worsen the burden of taxpaying households.”
According to him,
such undesirable incidence could have been avoided if the minister had been
more innovative in his attempt to raise revenue.
Dr Kwakye noted
that the minister should have addressed the nagging issue of tax exemptions
whose bill, sadly, has been languishing before Parliament.
“Also, we are
expecting firm action to deal with the several revenue leakages, including
trade mis-invoicing, transfer pricing, other illicit financial flows, fraud and
corruption. Further, ongoing initiatives to formalise the economy to widen the tax
net needed to be reinforced,” he added.
Businesses spared
The IEA said the
super profit-making banking, mining and telecommunications companies should
have been the target of the tax increases and not consumers.
“It is clear,
however, that our best efforts to raise revenue will still not yield enough to
fund our large expenditure needs. Serious consideration should, therefore, be
given to exploiting our vast natural resource wealth in a measured,
transparent, efficient and corruption-free manner to build an advanced economy
that will benefit current and future generations,” he stressed.
Expenditure
The IEA was also
unhappy that expenditure had been totally safeguarded under the budget while
revenue had been struggling.
“When you do not
collect enough revenue, you should be prepared to reduce expenditure; otherwise
you end up with a higher deficit and higher borrowing to finance it, which are
undesirable outcomes.
“Expenditure has
been buoyed by an expanding public sector and several new policy initiatives
compounded by crippling energy sector debt payments. It is time to re-examine
some of government’s policy initiatives such as Free SHS policy to determine
how cost could be reduced.”
It also added
specifically that there was room to reduce recurrent expenditure, including
remuneration, travel expenses, entertainment expenses, general administrative
expenses, etc. and thereby create for more productive capital expenditure,” he
said.
Energy sector debt
On the energy sector challenges, the IEA called on government to expand power coverage in order to boost demand and revenues.
BY Samuel Boadi
