Economist: Talk time tax is good

An economist, Dr Nii Moi Thompson, has said that the proposed talk time tax is an efficient tax system.

He has, therefore, suggested that the revenue to be accrued from it should be paid into a separate account and run on the lines of the Ghana Education Trust Fund (GETFund).

He said such funds, when lodged into the Consolidated Fund, were more often misapplied and not used for the purposes they were intended.

In an interview on the budget statement, Dr Thompson, who is the Executive Director of the Development Policy Institute, said the tax, if approved by Parliament, would be efficient, since it would be collected from fewer places.

He, however, called for more consultations from all stakeholders to address the various technical issues, while at the same time strengthening the capacity of the regulators to be able to effectively police the service providers to render more efficient services.

Dr Thompson stated that the country should be able to generate enough revenue to finance its own development agenda and not solely rely on external donors; adding that "there is no way the country can develop on reliance on donor assistance".

The government proposed to impose a specific excise duty per minute of talk time on mobile phone usage in the 2008 budget presented to Parliament in November.

Dr Thompson further stated that the government should not restrict the further expansion of mobile phone services and said there was the need to open up the market for more mobile phone service providers, adding, ''We need to smash the monopoly for consumers to have their money's worth."

Touching on other aspects of the budget statement, Dr Thompson said the government failed to mention the review of the Rent Act.

He said the Rent Act, as it stood now, was not helping anyone and stated that it had given way to the unsanitary conditions and social problems that Ghanaians found themselves in.

On health issues, the economist said the expenditure budget had increased but without any corresponding outcome and, therefore, called for more policy interventions in the health sector.

Giving figures to back his assertion, Dr Thompson said between 1999 and 2006, health expenditure as a share of Gross Domestic Product (GDP) increased from 1.9 per cent to 2.7 per cent but the key health indicators that had seen improvement in the decade ending 1998 suddenly reversed direction in 2003.

Among those indicators, Dr Thompson mentioned infant mortality rate, which fell from 77 in 1988 to 57 in 1998, only to increase to 64 in 2003, while the under-five mortality rate, which had fallen from 155 to 108 over the same period, rose to 111 in 2003, and pointed out that the budget statement did not address those policy issues.

In a related development, the Association of Ghana Industries (AGI) has welcomed the 2008 Budget statement, describing it as "a brave budget."

The President of the association, Mr Tony Oteng-Gyasi, said although next year was an election year, the steps taken by the government to emphasise the growth areas were laudable and brave.

However, the AGI President said for the kind of industrial revolution that the country needed, the budget did not address the basic growth impediments of industry.

"On the other hand, I think it hasn't set out to address the basic problems of industrial growth," Mr Oteng-Gyasi said.

"The focus of the 2008 Budget will be growth through massive infrastructural development. The areas identified are roads, water and energy," the Finance Minister said in his statement to Parliament.

But Mr Oteng-Gyasi said while the new initiatives on roads, energy and water were commendable, there was little provision for the business community, except for the proposal to review the stamp duty of 0.5 per cent on stated capital of companies.

The AGI made about 26 inputs into the 2006 budget but only seven were accepted. They included the establishment of the Venture Capital Fund, the rationalisation or abolition of the National Reconstruction Levy, the reduction in corporate tax and the tax amnesty.

This year, the AGI proposed a total of 47 initiatives, out of which 18 were incorporated into the budget.

Following the ineffective implementation of some of the policy suggestions of the association, it decided to recap them for next year's budget to emphasise their importance and the need for the government to effectively implement them.

Mr Oteng-Gyasi said the stabilisation fund was important to salvage the gains made by the economy and cushion it for accelerated growth.