The scarcity of resources requires that estimates are made for various activities and programmes to be carried out. Budgeting is all the more important for a nation facing competing demands from diverse interest. A comprehensive, clear and well planned budget is a critical development tool for the nation to tackle areas such as microeconomic stability, growth, infrastructure development, social protection among others.
Taxpayers Alliance Ghana (TPAG) is a member of the World’s taxpayer’s Organization. Our interest is to campaign for lower taxes, taxpayer rights, accountable governance, efficient and effective tax regime and tax justice. We believe that lower taxes, fair and equitable tax system in Ghana will reduce the economic burdens of the taxpayer, induce taxpayers to honour their tax obligations, spur economic growth and generate employment for the people. We seek to support justifiable tax at reasonable rates and tax relieves for the taxpayer.
OBSERVATIONS FROM THE 2015 BUDGET.
TPAG raised concerns about the numerous tax policy initiatives in the 2015 budget and called on the Minister of Finance to withdraw some of them entirely and better still reduce others. Specific tax policies we had concerns against included the following;
- 5% flat VAT on real estate development. Our concerns were that, prospective estate buyers will pay very expensive prices since the cost will be passed on to the buyer. It will also defeat government’s intention to reduce the housing deficit in the country.
- 17.5% VAT on petroleum products. We argued that this will lead to price hikes. No wonder that crude prices on the international market is still low but Ghanaian consumers are paying high price for the product. That private sector is reeling under this high petroleum prices in the face of erratic electricity supply and job losses have become rampant.
- 5% fiscal stability levy. The tax only added to the already loaded burden and increased the cost of doing business in the country.
- 1% to 2% special import levy. The policy lacked fairness and shrouded in ambiguous intentions. Importers pay custom and excise taxes and additional tax was only unfair.
- Increment of withholding tax on Directors’ remunerations from 10% to 20% demanded explanation to justify its administration and fairness.
- 17.5% banking charges. The policy is an affront to savings and reduces real income. Many people will cease sending their money to the bank to avoid this tax. It is simply unpopular.
OUR PROPSALS FOR THE 2016 BUDGET
TPAG calls on the government and the Minister of finance to urgently consider the following proposals in the 2016 budget.
- Withdraw or reduce all of the aforementioned taxes.
- Shelve the of slapping 17.5% VAT on sachet water. A higher price on sachet water will reverse the gains made in the reduction of water borne disease.
- Halt any attempts to increase road tolls which are already high. Transport operators will pass on the cost to commuters and the impact on their economic life will be severe.
- Indicate clearly plans to stop or reduce excessive borrowing which has ballooned the country’s public debt stock to GHC 94 billion representing more than 70% of GDP.
- Outline in clear terms the government’s intention to stop borrowing from the domestic market to free credit to the private sector. Obviously, excessive domestic borrowing is crowding out the private sector in the country.
- Demonstrate a through a deliberate policy to reduce interest rates which now stands at between 35% to 40%. Our neighbours; Togo, Ivory Coast, Burkina Faso have an average interest rate of 3.5% making Ghana’s rates ridiculously high and expensive for investment.
- Assure the youth how the 2016 budget is poised to create jobs. TPAG is concerned that manufacturing is growing at a dismal -8.0% while growth in agriculture slows to a disappointing 5.0%. The downward growth spiral in these key sectors will affect job creation and job security.
- TPAG will like to see how government fulfils its commitment to ensure local content especially how it deals with the raging controversy in the telecom and ICT sub sector. The intention to offload all the operations in the telecom and ICT sector foreigner merely on grounds of funding constraints puts local firms at a disadvantageous position.
- TPAG would like to see how government adopts realistic policy reforms in public sector financial management. Government of Ghana contracts costing sometimes over 100% more than those of donors and NGOs is worrying. Contract inflation and corruption in public projects is inimical to development and unfair in the use of the taxpayers’ money.
- TPAG wants to know how government is retrieving hard earned taxpayers’ money dubiously paid to Alfred Agbesi Woyome, Subah Info Solution etc and those recklessly stolen at GYEEDA, SADA etc.
- TPAG urges government to abandon efforts to increase utility tariffs. In our opinion inefficiency and corruption are to blame for the abysmal performance of the utility companies.
The consideration of these proposals in the 2016 budget will lessen the burden of taxspayer. The 2016 budget should impact the lives of taxpayers positively, impact economic growth, induce employment and engender social progress of the taxpayer. Lower taxes encourage a wider tax net and rakes in more revenue for the state. We expect the withdrawal of some taxes and do not anticipate increases in existing taxes neither the introduction of new once. TPAG will remain the voice of the Ghanaian taxpayer to lead the crusade for low, fair, just and an equitable tax regime in Ghana. We will also insist on accountable governance to demand transparent and judicious use of the taxpayers’ money.
Frank Asiedu Bekoe
Director of Research and Programs