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Opinions of Wednesday, 31 May 2006

Columnist: Kwamena, Ato

Wahala Revisited

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Whilst you were away, we took a look at the petroleum politricks and all the brouhaha from the NDC?s Wahala Concert Party. We ?demystified? the issue of petroleum pricing and proved beyond all reasonable doubt that the Wahala Concert Party people have no moral right to campaign for a tax-relief for the rich. We revealed their gross hypocrisy in that whilst they claim to be fighting for the ?ordinary? Ghanaian, yet they want the same ?ordinary? Ghanaian to be overtaxed so that they (the rich) can buy cheaper gasoline for their gas-guzzling cross-country vehicles (SUVs). If you missed that article, feel free to retrieve it from

With the frequent escalating price of Crude Oil, we, as a people, need to start planning ahead for the sake of our economy ? both in the short-term and long-term. In the long-term, our private businessmen and our government should start planning towards shifting our dependence on Crude Oil to biodiesel. We should be thinking of the E-85 fuel (85% Ethanol) as a major source of energy. We should also be thinking of other renewable energy sources such as solar, wind, etc.

But for now, every Ghanaian deserves to be proud of how our economy has held up against the severe bite of the escalating Crude Oil price on the international market. Although the naysayers would have you believe otherwise, there?s ample prove everywhere that we have been managing our economy far better now than we did in the past. In 1998 Crude Oil was priced at about $12 per barrel. In 2001, when President Kufuor and his NPP Party came to power, the price of Crude Oil hovered around $24 per barrel . But today that has tripled, and now hovers around $72. Yet, the only times we get any fuel shortages are when the Oil Marketing Companies (OMCs) are withholding the sale of gasoline because of an anticipated increase in the price of the product by the National Petroleum Authority (NPA). Otherwise, gasoline has been flowing like a river in our country.

Before 2001 we were spending over $300 million per year to import Crude Oil. Today, we are spending over $1 billion to import the same product, yet our economy is growing at 6% Gross Domestic Product (GDP). But the Wahalians would want you to believe that our economy is in a mess, despite the fact that all the facts and figures show otherwise. The mere fact that we don?t hear the government blaming the rising price of petrol as a cause for any imminent economic collapse, as we often heard in the past, is ample prove that we must be doing something right somewhere. At least, it shows we are becoming more responsible and are taking the captainship of our own destiny. When was the last time you heard these words, ?the problems in the economy are due to the EXTERNAL factors?? Those days of diverting responsibility are over.

Nevertheless, though our economy, which has been robust, has survived this rise in the price of Crude Oil, we must begin to ask ourselves the question: for how long would the economy be able to resist an implosion, in the face of rising oil prices? When would that last straw that will break the camel?s back be? Must we wait till then?

In the short-run, we must strive to cut down on demand for gasoline or at worse hold the demand stable. Is it possible to cut demand? Sure, it is! Decrease the price of gasoline and you?ll find the converse is true. Decrease the price of gasoline and you?ll be shocked about the rise in the demand of the product. It?s a simple case of demand and supply. Conversely, increase the price and demand will fall. This is one reason why we must not pay heed to the NDC and their Wahala Concert Party people. For if we were to make gas tax-free, the price of the product will become cheaper, and demand will rise. And with it, you?ll find out that Ghana has begun exporting gasoline to neighboring countries; albeit, through smugglers. We don?t want that. We can?t buy a product, subsidize it and then have national saboteurs export it to other countries for their own personal enrichment. So if we don?t intend to increase petrol taxes, this is certainly not the time to remove those taxes.

By maintaining the current tax rate, we?ll be controlling our demand and with that the amount of foreign exchange we spend on that product. Otherwise, pretty soon we?ll be doling out about $2 billion of our hard-earned foreign exchange to the Nigerians. Also, since our roads are already saturated and choked with vehicles leading to annoying traffic jams we can?t afford to decrease the price of petrol and thereby provide an incentive for people to import more gas guzzlers to bleed our country?s foreign exchange dry. No we can?t do that! So those who argue that we should do away with the taxes or reduce them are failing to see the economic implications of their opinion.

Another reason why we can?t reduce the taxes on petrol is that to do that will be tantamount to suffocating the ?ordinary? Ghanaian. In the 2006 Budget statement it was projected that we would get 4.1 Trillion cedis from petroleum taxes out of a total projected national revenue of 26 trillion cedis. Hence, petroleum taxation amounts to 15% of our total revenue. This may seem a lot. But consider this. In that same budget statement the Ministry of Education had a projected expenditure of 8.2 Trillion cedis. In other words, we need twice what we get from petroleum taxes to educate our kids. So if the NDC?s Wahala people tell you that we should make petrol tax-free, ask them to come out with a plan to pay for our children?s education. We can?t allow them to just talk the talk. Talk is cheap! Anyone can make noises. But it takes brains to come out with a plausible alternative plan. This, our Wahalians are too lazy to do! They?d rather talk or make noises than present a credible alternative policy to petroleum taxation.

As we learnt last time, it would be immoral to heed their recommendation to remove the 11 taxes on petrol (9 of which was put there by the NDC and 2 by the NPP government to clear Tsatsu Tsikata and Rawlings? mess at the Tema Oil Refinery (TOR)) and in it?s stead, tax the iced-water seller or the trotro mate/conductor to make up for the shortfall. This is the alternative policy that the Kwamena Ahwois, Kwesi Pratts, Benard Monarhs and their CJA cum Wahala Concert Party show are offering ? remove petroleum taxes so that the rich pot-bellied Wahalians can get cheaper gasoline for their gas-guzzlers, but then hit that iced-water seller who carries her 1-year old on her back with taxes. They said we should ?rope in all those in the informal sector?. If that proposition from the Kwesi Pratts is not ample prove of the moral decay that this country has undergone through two decades of dictatorship then nothing is! Rich people who claim to be fighting for the poor ? for the ?ordinary? Ghanaian ? want the same ordinary Ghanaian to be heavily taxed, so that they (the wahalaians) can fill the petrol tanks of their cross-country vehicles or SUVs. How sad!

Giving tax relief to the rich means that the little ?morsel of bread? that the Kufuor Administration is providing free-of-charge on a pilot basis to 200,000 primary school children through the School Feeding Program, will be snatched from the mouths of these kids as there wouldn?t be enough resources to finance such a laudable program. It means that that program will have to be curbed instead of expanded to include all of our children. How anyone can indirectly make such a proposal and then pick up their Bible or Koran and go to church or mosque on weekends or Fridays to worship their God beats my imagination! Until our friends in the Wahala Concert Party begin to see the ?human face? behind their proposals and how it will negatively affect lives they?ll continue to talk by-heart and propose insensitive programs. How can you pray to a moral God for a favor whilst at the same time you indirectly snatch the little morsel of bread that a poor kid; a toddler is enjoying? That food that you may desire to snatch from that kid?s mouth so that you can enjoy cheap gasoline may be his or her only means of preventing kwashiorkor or a stunted growth. So until we start thinking like humane beings; until we start truly caring for the poor and the ?ordinary? Ghanaians, the NDC?s Wahala Concert Part people would continue to propose such cruel and insensitive policies.

When they (the Wahalians) tell you that the government should subsidize the price of petrol, ask them ?At what cost should the government cut petrol taxes?? In life, every action comes with a cost. Economists call it ?Opportunity Cost?. You can?t eat your cake and have it. It doesn?t work like that. Cutting taxes for petrol means that 600,000 children of poor, ?ordinary? Ghanaians who are today in school as a result of the Capitation Grant would be back on the farms or on the streets. For their parents would not be able to pay for their school fees, PTA dues, etc, etc. Mind you, none of the children of the Wahalians would be affected if parents were to pay for these fees because they are not ?ordinary? Ghanaians but wealthy citizens. So whether we abolish the Capitation Grant or the Free Compulsory Universal Basic Education (FCUBE) Program, or not, Kwesi Pratt?s kids or Ayariga?s kids would still be in school. But can we say the same for those 600,000 full-blooded Ghanaian kids? They would definitely be back to the farms or on the streets. Would we rather have 600,000 kids educated or we?d prefer to kick these kids out to the streets or farms so that Kwesi Pratt can fill his car?s tank at a cheaper price? So who fights for the kids of the not-so-privileged Ghanaian? Definitely not the Wahalians!

Another opportunity cost of providing cheaper, subsidized petrol to the pot-bellied Wahalians is that, there would be no Metro Mass Transport Service (MMTS). The MMTS is financed by the Social Mitigation Levy on petrol. This tax is only paid by those who buy petrol. If you don?t buy petrol you don?t pay it. Those who buy petrol tend to be the rich or well-to-do in our society. So in effect, the NPP government introduced this tax so that the rich can foot the bill for the ?ordinary? Ghanaian so that they can enjoy cheaper transport fares. It?s with this tax that the Metro Mass buses are imported. So when the NDC tell you to remove the taxes on petrol, they are in effect calling for the folding-up of the MMTS so that the ?ordinary? Ghanaian can no longer get a bus fare that is cheaper than that charged by the trotros. Let them (the NDC) go and tell our people in the Upper East Region who celebrated the extension of this service to their region only this month that they (the NDC) want those new buses that they just got to be shut down so that the Wahalians can get cheaper petrol. Let them tell our people that, if they have guts!

So when the NDC?s Wahala Concert Party people tell you that fuel should not be taxed, ask them, ?at the expense of what: The Capitation Grant, the School Feeding Program, the MMTS, or the Upgrading of Secondary Schools?? Ask them to choose which of these programs and others that they want to shut down so they (the rich) can get cheaper petrol.

This insensitivity for the ?ordinary? Ghanaian as exhibited by the Wahalians is what happens in a country when people with no knowledge of an issue have arrogated to themselves the responsibility of educating the masses. So I say: Woe unto you nation, if Kwesi Pratt is your economist! Woe unto you, if Kwesi Pratt is the one churning economic data for you! Woe unto you, if PhD-holding sociologists begin to talk economics and finance! For they are like orthopaedic surgeons reading an electrocardiogram (EKG) ? they see things that don?t exist, and miss obvious things. Empty barrels are making the most noise in Ghana today. Day by day, they are getting more and more ridiculous!

Finally, my friend, in all things let?s not forget the iced-water seller who carries that one year old on her back. Let?s not forget the trotro mate or conductor who toils and sweats all day long but barely ekes out a living. Let?s not forget the kaya yoo or porter who bears a load more than 2 times her body weight in order to make a living. Let?s not forget them or if we do, then let?s also forget about going to church or to the mosque. For we would be wasting our time! A moral God would definitely detest our cruelty and insensitivity to the poor, ?ordinary? Ghanaian.

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