Ghana Is Doomed If We.......(Part 1)

Ghana is not a failed state but if we continue to do things the way we are doing now, then our country is heading towards doom. As a country, we cannot continue to use more than 40% of our annual budget on government salaries alone. The problem is not to be blamed on any political party if we really have to take a stance to get hold of this problem. What we need is political courage and Politicians who are ready to have cojones and tell the electorates that, government is not the answer to job creation but government is just a vehicle that will take the private sector to the destination where the environment will be conducive to job creation. There is no country in the world that can survive with government spending more than 10% of its budget on the salaries of government workers. Countries like USA, Germany, England, Japan, Korea, France, Sweden, Switzerland, Finland and most western countries where their economies continue to grow spend less than 5% on salaries of government employees, why are we spending 40% of our budget on government employee salaries?

"Civil servants receive on average approximately GHC 400 per month in salaries. This is more than 2 times the corresponding average in the private sector. Recall that this is a country where per capita income (not necessarily analogous to average adult income but indicative of it) hovers below GHC150 per month. Indeed by 2013, more than 46% - nearly half - of all domestic revenue (taxes, rates, duties etc.) will be used to pay public service employees."

What is the use of the government supporting the creation of 45 new constituencies to increase government salaries when most countries in the world are trying to decrease government employees and their salaries? As a country of 24 million, do we need to have 275 members of Parliament? Some people might accuse me of following the NPP stance on the creation the new 45 constituencies but that is not the case. It is not only the forty new constituencies I am against but I hope Ghanaians should demand that, we revert to the original 200 constituencies that was established by the 1992 or the fourth republic constitution and the 30 constituencies created in 2004 made illegal. Don't get me wrong, I understand the 1992 constitution made the provision that anytime new Districts are created, new constituencies should be created, but is that policy or law feasible? How many constituencies can we as a country continue to create? The new 45 constituencies will add at least 10 million dollars in salaries to the MP's, their Assistances and their benefits annually, money that can be used to provide new amenities. Is the 45 new constituencies going to make the government run better, I don't think so.

This article though is not about the 45 new constituencies but the 45 constituencies is typical of how our Politicians have lost touch with reality doing things that are not in the best interest of the country. We have a government with about twenty (20) Communication team members apart from the President's Spokesman and the Communication Director at the Presidency. What message is the government communicating that it needs so many people to speak for it despite having an Information Ministry doing the same job? This is not an indictment on the NDC government alone because the NPP government did the same. What is the use of having more than twenty five Ministries with a substantive Minister and two deputies per Ministry and then have the same Ministry at the Presidency as we used to have when NPP was in power and that policy has been maintained by this government as job for the boys and blotting the government salary expense?

The government is not a source of job creation and as history has shown with experiences from Russia and China that government cannot run industries efficiently and that is why those countries abandoned their communist economic ideologies where government was looked up to provide jobs for the masses. When USSR broke into different countries, it was found that, some government companies were employing ten people to do the work of one and these companies were depleting government revenue as these companies were running at a loss producing deficits on its balance sheet annually.

In Ghana, a good example is the former Ghana Telecom that was going bankcrupt because it was producing debt balance every year for years and was subsisting on government largesse. When Ghana Telecom was sold, it had 4,500 Employees on its payroll, Vodafone trimmed the Employee number to 1,400 and within three years, the company is running profitably with less than one third of Employees. What does this show? It means there were 3,100 employees who were drawing salaries and not adding any productivity to the company. Private sector jobs provide high paying jobs as compared to government jobs which means expanded tax base for government to draw more money for its infrastructural developments. Now talking about taxes, lets talk about how the government failure to broaden it tax base or people collecting bribes and allowing people not to pay their taxes have been affecting the development of Ghana.

In the situations to be discussed, taxes refer to all taxes, duties, fees, penalties, etc., etc. What are taxes as a percentage of GDP? What are taxes as a percentage of imports? What are taxes as a percentage of exports? How much does the government overall collect in taxes per year? Is the means of tax collection important; that’s, are how the taxes collected important? Can points of tax collection make a difference in the aggregate? Do the means and points of collection matter? But just as the security system and crime prevention, those who want to avoid paying taxes will find a way to evade taxes.

So let’s take a look at taxes and how the means, rate and points of collection affect the economy and society. Let’s take import taxes to start with. Currently, taxes on all imports are between 50% and 100%. Luxury cars, in which category all SUVs are classified, are taxed at just above or below 100%. But as it is with the security system, those who want to drive luxury cars find a way to import and clear the luxury cars from the ports, be it legally or not. And also as with anything outrageously unreasonable, criminal entities are established to “satisfy” the negative reaction to people’s feeling of unjustness. In this regard, importers endure untold frustrations to the point where the desires and feelings for the imported items are no more there and abandonment overrides all initial desires and good feelings. Sadly, the authorities in charge of remedying the situations involve themselves in the criminal activities making them beneficiaries. Thus “seized” items are auctioned at a fraction of the import tax to the criminal authorities.

Can the means, rate and location of import taxes have an impact on the establishment and perpetuation of these criminal activities? Do these criminal activities affect negatively on the economy and society? Is anyone looking to address these criminal activities? The answer in the affirmative is hard to come by. How much could the family in the village have been helped by the car that never got to them because of the criminal activities at the port brought about by the means, rate and point of tax collection? Asked another way, how negatively would the family in the village be affected? Who would take the sick family member to the hospital during the night when there are not taxis or trotros? The important question is, does anyone care and does it even matter?

Justice Sarpong

Houston, Texas

(CARDINAL of TRUTH)