Implement robust tax reforms to mitigate the Gaps in poverty and inequality – Prof. Bokpin

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Prof. Godfred Alufar Bokpin, on the 2021 CRIIR at the Forum
Prof. Godfred Alufar Bokpin, on the 2021 CRIIR at the Forum

The 2021 Commitment to Reducing Inequality (CRI) index report has ranked Ghana 3rd in West Africa, 20th in Africa and 121 globally, on its commitment to tackling inequality.

According to the report, out of 158 countries globally, the CRI measured governments on three pillars, public spending on key areas like education, healthcare and social protection, as well as taxation and labour rights, where everything shows clearly that governments could improve infighting inequality.

In his presentation at a multi-stakeholder forum organised by SEND GHANA, in collaboration with OXFAM, on the CRI index report on Wednesday 19th January, 2022, in Accra, Prof. Godfred Alufar Bokpin, an Economist and Professor of Finance at the University of Ghana Business School, underscored the need for stronger reforms in Ghana’s tax regime to curb inequality and poverty.

This according him, could be done by increasing corporate tax, reduce exemptions and make other income and wealth taxes more progressive among the citizenry.

Prof. Bokpin, said, “the continuous introduction of indirect taxes on the citizenry widened the inequality gap in the country. Because, indirect taxes like the proposed E-Levy among others only generated little revenue for the government but burdened the poor in society, unlike direct taxes which was more progressive towards development.”

Looking at the agriculture sector according to the report, government’s spending was lowest across the sub-region, just 1.4% of annual budget, despite the fact that majority of the population survived from the sector.

Professor Godfred Bokpin, posited that, even though Ghana had progressive tax policies on paper, it had low tax to Gross Domestic Product (GDP) ratio, mainly because of ineffective tax collection, widespread exemption from the tax net and tax-dodging.

Emphasizing that, “this is why I do not support indirect taxes like the E-Levy which is before us now because the more indirect taxes you impose, the more the poor suffers and it is the reason why you find that there are limited economic opportunities in this country and yet, Ghanaians are unable to take advantage because the average Ghanaian just cannot save enough.

All over the world, governments that made it, did so through direct taxes and that is more progressive to raise funds for the country and this is the way we must go.”

Prof. Bokpin, recommended that,
government should urgently increase corporate income tax to 30%, restore the top personal income tax rate to 35%, introduce a wealth tax, and make gift tax applicable to inheritances as well.

He intimated, “we need to design an effective and context specific property taxation strategy. Property taxation, a form of wealth tax, presents an excellent opportunity to make up the gaps created from COVID-19 but as it stands, measures to tax the sector is very weak, not well enforced and unpopular among politicians.”

In her welcome address, Mrs. Beauty Emefa Narteh, Co-chair of the Civil Society Organisation (CSO) Platform on Sustainable Development Goals (SDGs), stressed that issues of inequality are crucial to leaving no one behind as stipulated by the SDGs and however needed a concerted deliberations on tackling it because when inequality deepens, it affects all.

She explained that, “sometimes when we’re talking about some of these issues, we don’t see how it affect us personally, we see it as a concept. But I believe that, if we cast our minds and reflect on it, we can see that the more inequality is increased and deepened in the country, the more pressure and deeper it affects us as individuals and as a society.

So I will encourage all of us to dispassionately discuss this issue,…. let’s find practical measures to address them.”

According to her, “the CRIIR ranking Ghana 3rd in the ECOWAS Region for me is not something that we should celebrate, it should rather be an issue of concern so that collectively we can find ways and measures to address issues of inequality.”

In his Address, Dr. George Domfe, Development Economist and a Senior Research Fellow at the Centre for Social Policy Studies (CSPS), University of Ghana, indicated that, every developed economy progressed along the primary sector (agriculture) to secondary (manufacturing) and the tertiary sector (services) trajectory.

According to him, Ghana’s economy from 1957 to 2005, leapfrogged from agriculture sector, the mainstay of the economy, straight to services sector. Saying, “We jumped over the manufacturing sector, where we have the manufacturing companies to create jobs, to the tertiary where if you cannot write and read you cannot be engaged, and that is why unemployment has become a big issue.’

Dr. Domfe, further expressed with worry by saying that, “my interest has to do with the crop and livestock production,… that is where significant proportion of the poor are. And so if you come out to say that at the end of the 3rd quarter of 2021, the Ghanaian economy grew by 6.6%,….what is the growth at this sector that I’m talking about?

If that sector is not doing well, it will never affect the poor. And so to the poor, ‘the growth of the Ghanaian economy is meaningless untill it links up to the total liberation of the crop, livestock and production sectors of the economy where we ain’t seeing any growth there.’

The day’s forum drew together key stakeholders across government agencies, the private sector, CSOs, academia and many others.

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