Osafo Maafo's tricks exposed

(The Ghana Palaver) -- For the third time this year, ‘Ghana Palaver’ has disclosed that Value Added Tax (VAT) is going to be increased from 12 ? percent to 15 percent under the 2002 budget presented by the Finance Minister Osafo-Maafo last Thursday.

This, the Minister has not denied because he and the NPP think they can pull a fast one on Ghanaians. According to Ghana Palaver’s Economic analyst, VAT increase is not mentioned anywhere in the budget.

A letter of intent- Memorandum of Economic and Financial Policies, Memorandum of Understanding (MEFP) of January 31, 2002, singed jointly by Hon Osafo-Maafo and the Governor of the Bank of Ghana, Hon (sic) Paul A Acquah, to Mr Kohler, the Managing Director of the IMF, also did not mention any increase in the VAT, the analyst said.

He said a look again at the Budget, and in particular at Page 107, Appendix Table Three of the printed version line 11 on Value Added Tax (VAT) has a budget estimate of ?2.2 trillion cedis as the expected revenue under VAT.

Another look at line 19, said, “for the first time, a new revenue line has been introduced into our budget called “Other Revenue Measure” and a budget estimate of ?454.8 billion has been attributed to this item.

Ghanaians, the analyst said, have not been told what these “other revenue measures” are, but calculate it as a percentage of the budgeted VAT estimate, and 20 percent of the existing VAT rate of 12.5 percent equals 2.5 percent. That is where the VAT increase is hidden.

“That is Osafo-Maafo’s trick number one. But, we live to see how he and his NPP Government will succeed with a VAT increase Bill in Parliament. We have not forgotten ‘Yabremo’ 99.’ People have died foolish deaths in the NPP’s meaningless struggle against the Vat. We are watching and waiting.”

Osafo-Maafo’s trick number two. The budget, with all its increase in expenditure, is completely silent on how much salary increase is being awarded civil servants. ‘Ghana Palaver’ can authoritative state that salary increase for civil servants is not more than 20 per cent.

Again, Osafo-Maafo, in his belief that Ghanaians are illiterates as far as financial analyses are concerned, has sought to hide this fact. But a look at page 106, Appendix Table 2 of the printed version of the Budget reveals it. For the first time in the history of budgeting in this country, “Personal Emoluments” now exclude social security contributions, which have now been moved to “Transfer to Households.”

Using this narrower base, the uninitiated will calculate any salary increase over last year’s personal emoluments expenditure and get the impression that there is much bigger increase. However, when you restore “social security contributions” to “Personal Emoluments” so that you are comparing like items, the increase is no more than 20 per cent.

This ‘Ghana Palaver’ finding is actually confirmed in Hon Osafo-Maafo’s letter to the IMF, which we managed to download from the Internet in which he stated categorically as follows: “ the Government has made provision for a 20 percent full-tear increase in civil services wages…”

How civil servants are expected to use a 20 per cent salary increase to offset utility price increases of upwards of 300 per cent as well as school fees increases, hospital bills increases and most likely transport fare increases is something that our good friend civil servants union’s boss Chigabatia and his comrades of the association will have to ponder over.

Trick number three. Osafo-Maafo and his NPP spin-machine have been basking in the glory of having reduced inflation from the NDC’s 40.5 per cent to the NPP’s 21.3 per cent. What they have never stated is that these are the end of period (i.e. December 2000 and December 2001) figures.

The more critical figures when discussing inflation are, however, the annual averages because those give a more accurate assessment of the performance of the economy during the whole year, whereas the end of the period figure could be “flukish.” And, the annual average inflation figures given in the budget itself tell an entirely different and very interesting story.

A look at Page 105, Appendix table 1 of the Budget (printed version) shows annual average inflation rate for 2000 (under the NDC) at 25.2 per cent, whilst the annual average rate for 2001 (under the NPP) was 32.9 per cent. So was inflation up or down under the NPP? Up, if you take the annual average rate, and down, if you take the end of period inflation rate.