The Government of Ghana must report accurate figures on the debt situation in the country, Dr Lord Mensah, a senior lecturer at the University of Ghana Business School, has said.
He explained that if the government paints the real picture of the economy to Ghanaians, it will make it easier for the people to accept to pay new taxes that are introduced because they already know the situation on the ground.
Dr Mensah told Abena Tabi on the Key Points on TV3 Saturday, March 27 that if the impression is created that all is well with the economy only for the duty bearers to turn around the introduce more taxes, it will be difficult for the taxpayers to accept to pay those levies.
The government has introduced in the 2021 budget statement a Covid-19 Health Levy of a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate to support expenditures related to Covid-19.
“To provide the requisite resources to address these challenges and fund these activities, the government is proposing the introduction of a Covid-19 Health Levy of a one percentage point increase in the National Health Insurance Levy and a one percentage point increase in the VAT Flat Rate to support expenditures related to Covid-19,” the budget said.
The government received flak for these new taxes at a time scores of Ghanaians cost of living has gone up following the impact of the COVDI-19.
But Finance Minister-designate Ken Ofori Atta justified the introduction of the new taxes during his vetting by the Appointments Committee of Parliament.
Mr Ofori-Atta said “Not everything is gone up. We need to burden share, we need to move forward.”
Dr Lord Mensah said in relation to Ghana’s debt and the new taxes introduced that “If you under-report and in the end, you turn around and tell them to pay something it will be difficult to explain that to them.
“So, reporting and fully reporting discourse is very important. When it comes to public service there is nothing like mandatory disclosure and then disclosure that you can hold on to. For me, the more information you give out to the public the better it is for them to understand you when you are going out with your fiscal policies by introducing taxes. I think we should better in reporting
“But I understand where the Finance Minister is coming from because these are information that when it gets out there people will be saying even our debt level is now 80 to 85 per cent but implicitly if you take the budget critically and you analyze you will realize that the debt that we have in there as expected by end of the year is even more than 85 per cent of our GDP.
“If you go through the interest payment that we are supposed to have, the financing gap we have created out of the budget is about 41billion and over which we are going to finance and then in the same budget it was stated that our debt stock was around 240 plus billion. If you put all these together and then you relate it to our GDP which is about 440plus billion, you will realize that we are heading towards about 85 per cent for more than the 76 per cent that has been put out.
“If you look at the budget we are hitting around 85 per cent and. If you look at the recent statement that came from the World Bank they are projecting our debt by 2023 to be about 81 per cent of our GDP. I was not surprised.”