He noted that, rather taxes were increased because the country is either “broke” or “bankrupt” hence a desperate attempt by government to generate enough revenue to finance its expenditure.
Franklin Cudjoe said, the country’s financial accounts have fallen by 45% which “means that in constant dollar terms we currently have 775 million dollars, if we thought that, that figure used to be 45 percent more, then that explains something significant for you.”
Government has over the past few months increased the tax rates in the country, increasing utility tariffs by 59.2% for electricity and 67.2% for water in December 2015.
It has also increased petroleum products by astronomical margins because of the passage of the Energy Sector Levy by Parliament.
However, price hikes have raised massive public uproar with Organised Labour demanding an immediate reduction and a 50% increment in the salary of public sector workers leading to subsequent demonstration and strike action to force government to yield to their demands.
Not to talk of Withholding taxes. Withholding taxes have also been increased.
An Economist, Dr. Godfred Bokpin among other people have attributed the tax hikes to the IMF programme.
Meanwhile, Franklin Cudjoe believes that is not the case.
Making his argument succinct, Franklin Cudjoe indicated that, “1. Dwindled account “The first reason why there seem to be a plethora of taxes and no letting up is not necessarily because we went for an IMF programme, it is because our financial accounts have dwindled by 45%. What it means is that in constant dollar terms we currently have 775 million dollars, if we thought that, that figure used to be 45 percent more, then that explains something significant for you.”
2. Buyers ditch Ghana’s equity “Secondly what it means is that most buyers of Ghana’s equity have stepped back. Ghanaians who would probably want to buy government bonds have stepped back including foreigners. Foreign companies are not lending to Ghanaian businesses as much as we would have wanted and international investors are also scaling back on projects and most Ghanaians are choosing to invest elsewhere.”
3. Huge debt “If you look at the debt owed by the ministries especially the ministry of power which owes 260 million dollars, the ministry of works and housing, 220 million dollars, the ministry of health 170 million dollars, If you look at each debt by these three ministries, it is bigger than the total allocations given to most ministries in the country.
He also explained that, the ministry of power’s debt is 11 percent more than its expected revenue. “So if you are seeing these increases in taxes it can only mean one thing that we are truly truly broke or bankrupt to the extent that the only way you can actually redeem the situation is to pile up debt.”
Source: Newsghana.com.gh (with additional files from Citifmonline.com)
