The Minority in Parliament has questioned the veracity of revenue predictions in the 2022 budget, doubting the government’s ability to reach its GH100. 5 billion expectations, of which GH80 billion will come from taxes.
Dr. Cassiel Ato Forson, Member of Parliament (MP) for Ajumako Enyan Esiam Constituency, noted that the estimates of a 45 percent increase in tax revenue from the prior year was unprecedented and unrealistic when speaking on the floor of Parliament to debate the 2022 Budget Statement and Economic Policy.
“In nominal terms, the government is seeking to raise GH₵25 billion additional revenue in taxes.”
Dr Ato Forson
The tax projections, Dr. Forson said, had still been overestimated by GH10 billion, representing 2% of GDP, despite the attainment of GH6.9 billion from electronic transactions, about GH1 billion from the introduction of benchmark value, and 2.5 billion from the initiation of compliance measure, which was normally not costed in the budget (GDP).
Cassiel advised against over-projecting revenue since it could worsen the public debt crisis. While the budget deficit is expected to rise to 12.1% by the end of the year, the final figure could be as high as 13%.
“In fact, I project that we will end the year 2021 with a public debt of GH₵355 billion Ghana Cedis, representing 81 per cent of our GDP. The highest since HIPC.”
Dr Ato Forson
Dr. Ato Forson stated that the Ghanaian economy troubles will be exacerbated if existing projections were not adjusted in the budget and said the budget will be “sick from what we call stagflation with acute debt overhang syndrome.”
The ranking member noted that the economy’s current position would indicate weak real sector development and high unemployment, posing a security danger, as well as high inflation fueled by rising fuel prices and high food prices.
The debt overhang scenario became evident in 2021, when GH34.4 billion was spent on debt servicing, accounting for 93% of revenue.
Within the nine months from January to September, GH37.1 billion in income was collected, with GH25.3 billion utilized to pay interest on loans and GH9 billion for amortization, according to the budget.
Dr Forson voiced his worries about how the government planned to fulfill its GH55 billion revenue target for 2021, pointing out that the revenue generation trend revealed that about GH12.3 billion was raised on average quarterly this year.
As a result, Dr Forson believes the government’s ability to earn GH18 billion to reach 2022 targets is unachievable, as it would entail collecting more than 50% of quarterly income.
“I am aware there are seasonality and revenues perform better at the end of every year but the evidence before us suggests that revenue increase by about 20 per cent, so how come you are projecting that revenue will increase by 50 per cent.”
Dr Ato Forson
However, according to the Minister for Lands and Natural Resources, Mr. Jinapor, he argued that the essence of the budget, particularly its tax predictions, must be debated in the light of the current situation throughout the world owing to the COVID-19 pandemic.
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