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Opinions of Sunday, 2 June 2013

Columnist: Ofosu-Appiah, Ben

Expanding the Tax Net is Good,

.....But Making Sure the Revenue Basket Doesn’t Leak is Much Better !!

President John Dramani Mahama speaking to a cross section of the Ghanaian community in Tokyo, Japan on the sidelines of the ongoing 5th Tokyo International Conference on African Development (TICAD V) stressed that his government is determined to expand the tax net in Ghana in order to rake in more revenue for infrastructural development.

He further decried the poor attitude of Ghanaians toward the payment of taxes which makes it difficult for the government to address the development of the critical infrastructural needs of this country in order to move it forward. While it is a good idea to expand the tax net in order for the government to generate more revenue to prosecute its development agenda, this will amount to nothing and will further cripple the economy if the current leakage of our revenue basket is not sealed water tight. We are currently going around the world literally with a bowl in hand begging for everything from grants, gifts, concessionary loans and even loans at commercial rates whereas a lot of that revenue could be generated at home if we had strict and prudent revenue management system in place.

Let me give you a clear example. Our two sea ports at Tema and Takoradi alone are capable of generating the $3 billion loan we are currently begging the Chinese for if we put in place prudent, water tight, transparent and accountable system in place. A system that can be tracked, and also put in place strict and severe punishment for offenders and people who try to divert monies that should have gone to government coffers into their own pockets.

What we currently have in place is a sham of an accounting system where as much as about 80% of the taxes people pay end up in private pockets and individual personal accounts. An economic management team that lacks creative ideas on how to stem the declining tides in our economy always look up to increased taxation as a way of raising revenue. Day in and day out we hear increase in import duties, excise duties, petrolueum products and gas among others but where is the revenue that these taxes generate and what are they used for?

Owing to lack of accountability and strict monitoring procedures, all these monies end up being diverted into private personal bank accounts, and the little left is abused and misused. So we come back to square one, the same old story, NO MUCH WORSE situation before increased in taxes. Because taxes have gone up, the people begin to feel the negative impact of the increased taxes on their daily activities and their business but the benefit which should have derived from the increased taxation like improved infrastructure and more efficient services to mitigate the harsh effects of higher taxes are not derived making life more miserable for everyone except the “stealers”. And then the government realizing the increased taxation didn’t make a dent on its revenue go for another round of taxes, with the same effect and making it more and more unbearable to live for its citizens. The vicious cycle of taxation has set in and the poor actually bears the brunt of it.

What the government needs to do first and foremost is to put in place a water tight revenue management system which is cheat proof and swindle proof. Something the SAKAWA people who run the Ghana Revenue Authority can’t touch! It was speculated during the NPP’s time in office that the then head of Ghana Ports Authority built over 30 new houses during his time in office! How possible?! How much was his salary and the fringe benefits put together? The only way this could happen is to continue with this leaking system with no oversights. We all know how even low ranking Customs officials at the ports put up big houses within 6 months of being hired. We are ruining our country if we don’t seal all these loopholes. I know the late former President Mills as the former head of the Ghana Internal Revenue Service, realized the enormity of an obstacle that this leaking revenue basket posed to our development efforts. He felt passionate about it but may be his poor health didn’t allow him to tackle the problem head on. The current president owes it a duty to Ghanaians and to himself to seal this leaking revenue basket ONCE and FOR ALL.

Another thing the government must do is to strictly monitor the process and deal swiftly without mercy with anyone trying to embezzle funds, or seen diverting state monies elsewhere. It is only a severe application of the laws and severe punishment to corrupt officials that will make everyone wake up to his responsibilities. It is only this no nonsense approach that will change the bad nuts among us. In the three months rule of the AFRC in 1979, kalabule, bribery and corruption, embezzlement, etc vanished. Arrest, prosecute, imprison and shame. This is the only way to go. The last but in no way the least thing I want to talk about is government’s own use of the tax payers money. With all due respect, Mr. President, you can’t ask me to pay more taxes if what you are going to use my tax money for is to sponsor some 2 by 4 pastors to Israel to ostensibly pray for the nation. Does God live in Israel?

I may be justified in not willing to pay taxes if my tax money is going to be dished out to friends and buddies who are well connected to raise guinea fowls which cannot be traced, for afforestation programs where no trees are planted, to “ train” people in akonfem rearing where no one has been trained and the people who are supposed to be trained know better about akonfem rearing that the trainers, and to an organization that is charging us Ghc 2.50 for one guinea fowl egg whereas on the open market we can buy one egg for less than 50 pesewas. I can’t throw my tax income into a bottomless pit of corruption, a system that rewards the haves against the have nots, a system that pays politicians big phat salaries, offer them free cars, bungalows, servants etc while essential service providers like doctors, teachers, nurses, pharmacists etc are ignored. So government has a lot of work to do to demonstrate to the poor Ghanaian that he needs to pay more in taxes and that his tax money will be put to a good use, and that the money is not going to be wasted on an over bloated government.

So Mr. President, go put your house in order before you come back to talk to me about widening the tax net, and about any tax increases. Put in place a prudent revenue management system, a water tight revenue basket, impose fiscal discipline on your government, and punish severely corrupt officials of state in government and outside of government, then we can have a discussion about increased taxation.

Ben Ofosu-Appiah, TOKYO, JAPAN. The writer is a senior socio political and economic analyst and policy strategist based in Tokyo, Japan. He welcomes your comments;