An economist, Dr Patrick Asuming, has disclosed that increasing the Value Added Tax (VAT) will not augur well for the country.
According to him, the possibility of an upward adjustment in the VAT from12.5% to between 14 and 15 per cent ahead of the budget reading is not a good idea. He indicated that there are other avenues government can focus on to increase revenue.
Dr Asuming noted that with the passage of the exemption bill, it will accrue more revenue once government is committed to ensuring that, likewise the property taxes which he described as it is “more progressive”.
“We know that there are a lot of loopholes in our tax system, and we do have a lot of illicit financial outflow from the country. So, I think at this moment we should focus on those measures and making sure that we are collecting revenues more efficiently. To raise the VAT rate at this point, I think it won’t be a good idea at all.”Dr Patrick Asuming
Commenting on the budget reading schedule for November 24, 2022, Dr Asuming stated that with last year’s budget discussion, government run into a lot of problems because its revenue measures could not be passed, and political posturing didn’t help at all. He expressed optimism that the situation will be different as both sides of the House will reach a consensus on the budget.
“So, I think beyond making public statements, I hope that behind the scenes, there are discussions and engagements. But ultimately, it comes down to what sort of revenue measures they bring. The minority, they represent their own constituents, if they feel that whatever is being proposed won’t serve the interest of their constituents, I guess they have the right to say that this doesn’t work. Ultimately, we just hope that they will put the interest of the country first.”Dr Patrick Asuming
Expectations from budget presentation
Highlighting on his expectation for the budget presentation ahead of an IMF deal next year, Dr Asuming underscored that it will be a budget “heavy on austerity”. He emphasized that there should be some revenue measures captured in the budget as the country needs to raise more revenues.
“We also have to see some action on the expenditure side. At the very least, we should hear how government is going to spend a little bit more efficiently than it has done in the past and then we do hope that the rate of increase in government expenditure is way lower than what we’ve seen in the past. As to whether that will come by cutting the size of government or reducing some of its programs or reducing the perks to government officials is up to government. But I think we have to see government is showing some true commitment to reducing the size of its expenditure.”Dr Patrick Asuming
Meanwhile, a leading member of the New Patriotic Party (NPP) Gabby Otchere-Darko, has pleaded with the National Democratic Congress (NDC) Members of Parliament to support in approving the yet-to-be delivered 2023 budget statement after its presentation. He indicated that the 2023 budget is crucial.
Mr Otchere-Darko revealed that the budget presentation “can’t suffer a fate similar to the 2022 budget” and its revenue measures.
“It could completely derail negotiations with the Fund if not passed. Critical to this are its revenue generation measures. We plead the NDC joins NPP in this for Ghana.”Gabby Otchere-Darko