On Ghana’s Taxation Fiasco
Taxation is one of the most important functions of any government. It takes sharp minds to sit and plan. It is not done by mere political rhetoric and gut instincts as rulers and even elected politicians seem to do in Ghana. Every nation has their super-smart intellectuals behind the scene who help. America in the beginning had her Alexander Hamilton.
I was in Ghana in 1989/90 when in one of Ghana's darkest and irrational days, then Finance Minister of the PNDC, Dr. Kwesi Botchwey imposed a 500% tax on items he called “luxury” items. He called it “super-sales tax” and said it was meant to, in his Marxist-Socialist books, level the playing field between the rich and poor, and cut down what he called “conspicuous consumption”.
Nana Akufo Addo has never claimed to be a Marxist-Soxialist! Has he? Why not reduce taxes then, instead of raise them?
In my personal opinion and analysis based on studying American economy in the last half century, lower taxes are better and stimulates production and employment. I am not an economist and won't want the title; but I do know a thing or two about Engineering, Manufacturing and Business and production. Any tax above 10% for government to spend is a sacrilege and the NPP should be careful!
Items imported into Ghana already attract
1. Duties of 15% to 55% and
2. Port handling charges (on a small machine I imported from China for food processing it cost me almost $1,900 and the port handling alone was $900);
Then you add
3. VAT of 17.5% on items we as a nation have not produced or added any value to.
4. NHIL of 2.5% for health insurance that nobody can show accounts what the funds are used for!
Then you add
5. Taxes on petrol - about 35% or Ghs 5 for every 15 you pay per gallon.
6. Road and bridge tolls that is about ghs 1 per vehicle and in a day we could raise an estimated ghs 1 million.
Who accounts for that money? Where can the paying public see the accounts?
And the only area I'd say is undertaxed is
7. Real Property taxes on residential houses and commercial buildings. I am a home owner in East Legon and my water bill is far more than my annual property tax.
Why not collect property taxes and provide underground sewage system for our cities and towns, and eliminate the ugly eyesore of open gutters in nice areas in our Ghana???
Lack of Knowledge:
Ghanaian authorities do not know that commercial properties are rated by total rentable square area in Sq.ft or sq.m. Simple elementary arithmetic! Warehouses, high rises and major hotels should pay fair taxes! A study should be made and fair taxes assessed. Government should stop taxing the poor roadside merchants or what we call “apampam” store or farmers or small shops that can hardly survive!
I am on a forum of retired Engineers, Scientists and Professors sent overaeas on American Scholarship in the 1960s and the lamentation of our country is the same! Many in their retirement wish they could advice government; but I know we talk in vain. Ghanaian officials in government are not sincere about real change and real solutions to the challenges of socio-Economic growth. The real intent to some of them is the opportunity to either bring in a major contract and get their share, or travel and attend conferences. Even in the latter, they never pick up any knowledge or skills or contacts to help apply real practical changes in Ghana.
Taxation should be based on production activities in Ghana and not the capital an investor is bringing in. Ghana should be cutting back on government spending instead of taxes to spend! No! Rather any taxes or money should be used to make Ghana safer and provider better transportation, water and power infrastructure that enhances business potential and success.
President Nana Akufo Addo's “Ghana Beyond Aid”, and “One-District-one-Factory” mantras could be more believable if Industrial Parks were built in these regional or district areas to cater for and invite business ventures. It is almost crazy to expect a start-up business to come to some village without good transportation, energy and communication infratricture to invest his millions or even thousands of dollars! No! It ain't gonna happen! (As Americans would put it).
The road map for industrial and economic development has been laid down like a Blueprint by Lee Kuan Yew of Singalore. Ghana does not need to leapfrog anybody! Just be sincere and humble enough to learn from others!
Long live Ghana!
Dr. Kwaku A. Danso,
President-co-Founder- Ghana Leadership Union
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