Economic Gains To Be Impacted Negatively If...

An Economic and Financial analyst, Dr Lord Mensah has warned of grave consequences should government increase or introduce new taxes in the upcoming mid-year budget review.

According to him, an increase in taxes will erode the gains made in the economy and cripple the objective of gains to be transferred to the citizenry.

The Finance Minister, Ken Ofori-Atta has indicated that government, in the mid-year budget review, will present a package of tax policy measures aimed at sustaining funding for its key programmes.

According to him, there is the need to review these tax measures to make more responsive to current trends.

He also argues that the review should help address challenges with revenue mobilization as all options are still on the table in terms of reviewing the current revenue measures.

But Speaking to JoyBusiness, Dr Lord Mensah, the lecturer at the University of Ghana Business School said, to shore up revenues, the government should rather turn its attention to increasing the country exports.

“We know that taxes are the highest contributor to our revenue, but other things like what we export what we are doing about it. Looking at where we find ourselves now and the way we have been experiencing economic growth which is not been transferred into the citizenry’s lives, I believe that the timing is not right for taxes to be increased or new ones introduced,” he said.

“Government should find a way to ensure that we expand the tax net but increasing or introducing new ones. Where we can expand the tax net but not necessarily increasing it, then look at other things that contribute to our revenue generations to leverage on more export and I think that should solve the problem,” Dr Mensah said.

In 2017 around this same time, revenues were short of the target, which pushed the government to slash its planned expenditures to stay within the full year fiscal deficit target of 6.3% of Gross Domestic Product.

But in 2018, the circumstances have changed with the fundamental also taking a different twist. And Joy Business checks shows a rather more bleak picture, revenues again have fallen short of target in the first quarter of the year, recording a total revenues and grants standing at GHc9.4 billion, or 3.9% of GDP.

Also, capital expenditure in 2017 suffered the most, with spending on development projects amounting to just 0.5% of GDP, the same as in the first quarter of 2017.

Dr Lord Mensah further stated that for now, if they increase or introduce new taxes, the objective of transferring the economic growth that we are seeing now to the level of the ordinary Ghanaian would be crippled.

However, the government currently is armed with $750 million out of the recently issued $2 billion worth of Eurobonds, available for budgetary financing, along with another $200 million in International Monetary Fund support, originally meant a balance of payments support but now available for use as 2018 budgetary support.