Minority MPs Blame Current Economic Hardships on Harsh Fiscal Policies

Minority Leader, Haruna Iddrisu flanked by his deputy James Avedzi and Mr Forson

Accra, Ghana, November 13, 2018//-Minority Members of Parliament in Ghana today blamed the current economic hardships in the country on harsh fiscal policies implemented by the Akufo-Addo-led government.

Speaking at the third pre-budget round table discussion on Tuesday, Minority Spokesperson on Finance, Cassiel Ato Forson said due to these policies: “Fuel prices have gone up on 17 different occasions in the last 21 months leading to increases in transport fares and food prices.

The Ghana Cedi has depreciated significantly leading to hardships and uncertainty for businesses”.

Value Added Tax (VAT) has been increased through the back door by decoupling National Health Insurance Levy (NHIL) and Ghana Education Trust Fund (GETFund) Levy from the old VAT regime (and denying businesses their right to Input Tax Credit), leading to a 5% increase in production cost which has affected the prices of all goods and services in the country, he added.

The Minority National Democratic Congress (NDC) MPs noted that their prediction that VAT was going to be increased had come to pass despite denials by the Finance Minister and the governing New Patriotic Party (NPP) MPs on the floor of Parliament.

Mr Forson said: “After being ignored when they asked for an efficient tax regime, businesses decided to speak with the language they know best: increase in prices. It is time for the Government to listen, to alleviate the plight of Ghanaians”.

He added: “The amount paid for Import Duties have gone up astronomically leading to an increase in the price of imported items because of the disruptions in policies that have resulted in distorted Benchmark system and the Cargo Tracking Notes measures.

A luxury car tax of between GHS 1,000 and GHS 2,000 for vehicles with engine capacity ranging between 2950 cc and above has been imposed. Note that these cars already attract graduated import and excise duties at the time of importation”.

“Though referred to as a Luxury Car Tax, this affects vehicles that do not boast of any luxurious features including those used on farms and in construction.

A 10% increase in the Personal Income Tax (PIT) marginal rate to 35 percent for employees and self-employed earning GHS 10,000 and above has been introduced”.

The 5% National Fiscal Stabilization Levy has been extended beyond its 31st December 2017 expiry date, effectively making it a new tax, Mr Forson told participants at the well-attended event today.

“The 2% component of the Special Import Levy has been maintained in spite of the sunset clause in the legislation that introduced it. These tax measures and other policies have combined to make life unbearable for Ghanaians and they run contrary to the clear promise made by President Akufo-Addo in 2016”.

Low Investments, unemployment and job losses

The fiscal measures discussed above, have had serious consequences for Ghanaian businesses and households.

“Many Ghanaians have suffered job losses within the last 20 months. Most of these job losses occurred within the banking and finance, the media, and the mining industries.  Businesses in these industries are struggling to cope with the cost of running their operations and have had to lay off workers or close down”, Mr Forson and his colleagues stated.

The resulting unemployment situation is gradually developing into a crisis. What is even more worrying is that, instead of redirecting policy incentives to improve the productive base and create employment for the good people of this country, the Akufo-Addo government continues to be fixated with political sloganeering.

In the midst of this unfolding tragedy, they continue to claim that they are shifting the focus of the economy from taxation to production even as they continue to heap taxes on these same businesses with very little production incentives., they noted.

A job loss suffered by one member of a household translates into the welfare loss of a household numbering about five (5).

The NPP government must be reminded that evidence of wealth is in the well-being of the people and not in political and macroeconomic jargons,

The current high rates of unemployment are the result of policy indiscretion and political sloganeering. The implication of the rushed implementation of unplanned populist policies are daunting, causing government to cap allocations to earmarked funds and cut capital expenditure allocation to Metropolitan, Municipal and District Assemblies (MMDAs” that are mandated to execute capital investments on behalf of government.

In fact NHIL, GetFund, Road Fund, among others have been suffocated to death. What was billed as an economic turnaround has brought severe hardships, they quizzed.

“The lay-offs are unprecedented across all sectors of the economy and government must act accordingly. If this NPP government has lost count of the number of job losses that the good people of this great nation have suffered within twenty (21) months of leadership by propaganda…”

Fanfare budgets          

The turn of events after the 2017 and 2018 “funfair” budgets are really shocking to many Ghanaians. Things seem to have fallen apart and the center can no longer hold. Where are the jobs Mr. President? You promised Jobs and now you are delivering unemployment. We are indeed sitting on a time bomb, the lamented.

Vodafone Ghana has laid off 1500 to 2000 employees within the first four months of 2017. Similarly, workers lost their jobs in Tema as steel factory shuts down a steel company in Tema, Rider Steel Ghana Limited due to inability to pay for what they describe as unfair and high electricity tariff.

TV3 sacked workers in massive restructuring.  100 workers of the TV station have been laid off.  Many public sector workers have suffered employment termination by government and several others are gripped by fear of losing their jobs.

African Eye Report

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