All eyes on Finance Minister as he presents mid-year budget review today

• Posted on July 19, 2018
• by Ellsamwise King
• Comment

National attention will focus on Parliament House today as the Finance Minister, Mr. Ken Ofori-Atta, presents the mid-year budget review to the people’s representatives.

The build-up to the presentation has been one of the mixed expectations.

Across segments of society and especially in the media, there have been heated debates, as reports have suggested that there will be tax increases.

Economists, political commentators, and politicians have speculated that the Value Added Tax (VAT) rate will go up from 17.5 to 21.5 per cent, the National Health Insurance Levy (NHIL) will see a rise from 2.5 to 3.5 per cent, while other forms of taxes are expected to see a jump to meet rising government expenditure.

The Finance Minister has not spoken to the issue, except to say that today’s mid-year review will be good.

Nonetheless, the debate has continued unabated, with the Minority accusing the government of making promises of tax reduction to win political power, only for it to turn round to make attempts to increase taxes.

Government communicators have, however, debunked this claim, saying that, indeed, some nuisance taxes have been abolished and that any effort to raise more revenue is only an attempt to meet government’s agenda of transformation and ensuring that the country achieves its goal of Ghana Beyond Aid.

Some economic and political analysts have posited that if the country can check waste and corruption, the country can save a lot of resources that could be channeled into social projects.

There are reports that revenue from the ports has decreased by 23 percent as of June 2018, while the Auditor-General is on record to have stated that 50 percent of the revenue generated in the country goes to pay salaries.

Business community

Be that as it may, some members of the business community believe that the economy has been tight this year, compounded by the recent drop in the value of the cedi against the dollar, overdue payment of debts from the previous regime and other commitments such as payment for the free SHS, National Health Insurance Scheme (NHIS) payments and statutory payments to the District Assemblies Common Fund (DACF) and the Ghana Education Trust Fund (GETFund).

When the government took office in 2017, it raised issues with the debt overhang from the Mahama administration, which culminated in a prolonged debate between the government and the Minority.

The government also needs money to fund its high-profile projects, including the free SHS, since all the projects are capital intensive and may require additional sources of income to implement.

Perspectives

While some Ghanaians hold the view that taxes should be increased to fund national programmes, others hold a contrary opinion and insist that over-dependence on taxation will cause more suffering to the already impoverished Ghanaian people.

Those against an increment in taxes are urging the government to widen the tax net to bring in more businesses and persons who are not paying taxes.

They are also calling on it to focus on property rates collection, with the argument that many households do not pay property tax.

Others are of the view that the government should do more to cut down spending, punish corrupt officials whose actions dissipate public funds, as well as overhaul operations at the revenue collection agencies.

Minister of Information

The Minister of Information, Dr. Mustapha Hamid, told the Daily Graphic that MrOfori-Atta would make a strong case to Parliament that the Akufo-Addo government could be trusted with the public purse.

“When he appears before the House, the Finance Minister is expected to make the case that the government has put in the pockets of people some estimated GH¢5 billion,” he said.

That, he noted, was “as a result of several interventions implemented last year to stimulate economic freedom, including tax reliefs, electricity tariff reduction and critical social welfare support, including free SHS and the school feeding programme”.

He said the 2017 budget saw the abolition of 17 ‘nuisance’ taxes which, he noted, ended up putting some estimated GH¢1.2 billion into the pockets of domestic consumers and businesses.

“The measures included the removal of the following levies: the 17.5 percent VAT/NHIL on domestic airline tickets, the five percent VAT on real estate sales and the 17.5 percent VAT on financial services. The removal of the excise duty on petroleum, the one per cent reduction in import levy for spare parts and the reduction of the special petroleum tax by 2.5 percent are all estimated to have cost the treasury over GHc1.4 billion. This is also money put in the pockets of Ghanaians,” Dr. Hamid stressed.

Reduction in bills

The Information Minister said March 2018 saw the significant reduction in the electricity bills of residential customers, which was estimated to have cost the treasury some GH¢545.6 million, with an additional GH¢630 million saving enjoyed by non-residential customers.

“Overall, expected average annual savings on electricity bills for Non-Special Load Tariff Customers (Residential and Non-Residential) and Special Load Tariff Customers (Industries) may amount to GH¢1.84 billion this year alone,” he stated, adding that “we believe this is cash we have put directly in the pockets of Ghanaians”.

He further maintained that an additional GH¢2 billion of taxpayers’ money was invested back into critical areas, including BECE fees subsidy, the expansion of the Livelihood Empowerment Against Poverty programme, fertiliser for the Planting for Food and Jobs programme, free SHS/TVET, the restoration of the nursing and teacher training allowances and the National Entrepreneurship and Innovation Programme (NEIP) start-up support.

He said soldiers were not left out, following the increase in peacekeeping allowances from $30 to $35 a day.

Dr. Hamid said the increase in the share of the DACF paid to persons with a disability had assisted individuals and families who benefited from the fund.

“The sum total of all these interventions is anything above GH¢5 billion. This is the money the government has forgone for the betterment of the ordinary Ghanaian. It tells you that when you pay your taxes, you can rest assured that the NPP will use it for your collective benefit,” he maintained.

He stated that the government had not shifted from its mantra that production was more important than taxation.

He said that was why it reduced the Special Petroleum Tax from 17.5 to 15 percent and the Energy sector levy rates for National Electrification and Public Lighting from five to two percent and five to three percent, respectively, among many other achievements.

He, accordingly, urged Ghanaians to have faith in the Akufo-Addo government to deliver on its promises to improve their living conditions.