Varying views keep pouring in from economic experts and many Ghanaians on the finance minister’s midyear budget review presented to Parliament yesterday particularly on the non-tax increment announcement.
Prior to the presentation, there were high expectations from the public of a possible vat increment following a social media post by Gabby Otchere Darko, a government functionary, which gave indications that government was likely to increase taxes.
But on what rather seemed a surprise to many, the Finance Minister, Mr. Ken Ofori Attah said government had no intentions of increasing taxes.
Finance Minister, Mr. Ken Ofori Attah
The Dean of the School of Business here at the University of Cape Coast, Professor Marfo Yiadom, sharing his views with ATL FM News on the midyear budget review said, he was not surprised at the no tax increment announcement by the Finance Minister.
According to him, what people described as speculations were rather a measure employed by the government to test the public approval should there have been a tax increment.
“In business, normally you would want to try the response, that’s why sometimes we use the grave vine. You put something out there, to see how people will accept or reject and that helps management to decide. So I think they did that to just sensitize public opinion but far and large I think people bought into it the only thing left is for them to get back and see the applications of that money.”
In his view, Professor Marfo explained that tax increment in its sense is not a bad idea if only government puts the revenue into good use.
“it depends on the earning streams of people, it depends on unemployment level whether it is low or high. if we have not improved unemployment levels, we do not expect that taxes are increased. Again, we also have developmental issues, NHIS, free SHS, all those have to be funded. Railway projects and all those things. So if there’s a window of opportunity to increase taxations that can be explored. It is the application of the tax money, so if we can reduce corruption, plan well, budget well, get value for money, that will be fine but if it’s the ‘chop chop’ that’s where we have the problem,” he explained.
Speaking on the recent cedi depreciation, Mr Ofori Atta said, on the contrary, the cedi has performed creditably well under the Akufo-Addo led administration as compared to previous years but was quick to blame the recent poor performance of the Cedi on “external Pressures”.
Professor John Gati Gatsi an Economist with the School of Business, UCC shared simmilars views with the finance minister.
“All the periods in the past that we experienced pronounced depreciation, it’s as a result of some shocks that comes into the economy especially from the external source. Now let me draw your attention to 2015-2016. What was the major external stock at that time? It was because the country budgeted for a crude oil price of 90 dollars per barrel and within a short period of time, the price collapsed to 15 dollars per barrel” he said.
According to Prof. Gatsi, that was “a huge stock and we need to also understand that, depreciation or acquisition is just an adjustment to stock. It is not as if that you are just looking on and then the depreciation happens, yes, we do know that our currency is a depreciating currency, but anytime that we experience any abnormal depreciation like we experienced in that period, and this period, then it means definitely something untoward is happening externally, that our currency needs to adjust to.
he said he was happy the financial minister made the observation since it defeated previous assumptions that anytime the cedi depreciated, then it means government was not doing much he added “So I don’t argue that except that sometime ago, we assumed that there was something one can do and we were not doing that is why we were having those pronounced issues. So I am very happy that the minister has brought up to the domain that look, external stock can have effects on the currency.”
Source: ATL FM News