Prof. Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER), has expressed concerns about the effectiveness and efficiency of the current tax items introduced by the finance minister during last budget hearing.
Per the Professor, some taxes, such as the sanitation levy, are useless and should be eliminated in favor of more effective taxes that generate revenue for the economy. Other levies, such as the financial sector levy, the COVID-19 levy, and health levies, he claimed, should receive more attention because they have shown to bring in more money for the government.
“Some(taxes) are not yielding the needed revenue. The sanitation levy, for instance, the quarter two of 2021 figures show that they are not yielding much. It is the covid-19 health levy as well as the financial sector levy that is raking in the revenue. But, sanitation levy for instance is not bringing in much. A review of these taxes to see whether they are efficient or we are rather spending more money collecting this little revenue, scrub them and replace them with something that will bring in more money to the system”.
Prof. Peter Quartey
Relying less on borrowing
Prof Quartey urged the government to take decisive measures to protect the economy from excessive borrowing. He demanded that the finance minister should devise innovative ideas for generating revenue for the economy.
“We expect the revenue numbers being better than we’re seeing now. With the talk of the digitization, we want to see more revenue being generated. We want to see higher forecast revenue mobilization and also prudent management of resources. If that is done, certainly we will be relying less on borrowing.”
Prof. Peter Quartey
The professor also encouraged the government to cut the mounting debts and return the country to debt levels that are sustainable.
“So, we want to see conscious efforts to reduce our debt, our high debt-to-GDP ratio to the medium term. At least by 2024, we should be back to sustainable levels.”
Prof. Peter Quartey
Ghana’s inability to service its debt, worrying- Bloomberg
Stuart Culverhouse, head of sovereign and fixed income research has mentioned that investors are worried about Ghana’s capacity to service its debts as the cost of the country’s dollar bond rises. This is due to the fact that the country’s debt has reached critical proportions.
The country’s debt-to-Gross Domestic Product ratio is currently about 76 percent. Some international experts and institutions have advocated for a budget that outlines how the government intends to enhance economic growth while stabilizing the fiscal environment.
Stuart stated “rarely do countries sustain such high interest burdens for any length of time without a crisis, an International Monetary Fund rescue, or default/restructuring.”
Deutsche Bank Economist Danelee also added that “without any material expenditure compressions, our forecasts show the budget deficit improving only moderately to -11%, -9.4% and -7.7% in 2022, 2023 and 2024, respectively.”
In the budget statement to be read tomorrow, November 17, 2021, the finance minister is anticipated to calm market concerns over the country’s financial sustainability and weak economic development.
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