Ladies and Gentlemen of the Press,
Thank you very much for your attendance. This is my first formal Press Conference since I was elected flagbearer of the NDC at our Party’s Special National Congress held on 21st December 2002. I would therefore like to take this opportunity to thank all of you for helping to make our Congress a resounding success.
I have invited you here today because of the need to assure the good people of Ghana that the NDC is aware of the choking pressure of growing economic hardship which is being piled on them by the NPP Government.
The broken promises have become more glaring. The harassment of persons who served or are associated with the previous NDC Government deceives nobody and is becoming counter-productive. And the 2003 Budget carries within it what can only be described as an attempt to perpetuate a massive deception of the people.
Ladies and Gentlemen of the Media,
The near 100% increases in the prices of petroleum products prior to the presentation of the Budget were bad enough. In my reaction to those increases at the time, I made the point that within the announced prices were taxes and other revenue raising measures that could be adjusted in such a way as to bring the prices down and make them a little more affordable for the ordinary Ghanaian. I suggested that properly calculated, the maximum price for a gallon of petrol should not exceed ?15,000.
Instead of bringing petroleum prices down, however, the 2003 Budget introduces a new TOR Debt Recovery Levy that is likely to have the effect of adding ?640 to every litre or ?2,900 to every gallon of the prices of all petroleum products.
The Bill for this Levy has already been laid before Parliament. Our understanding is that if passed, petrol for instance would sell at about ?23,000 per gallon whilst diesel and kerosene would sell at about ?20,500.
These proposed prices, I must say, would be simply too much for Ghanaians to bear. Not only that, it is also unjustifiable for the Government to seek to impose a TOR debt recovery levy when taxes on petroleum prices alone are to yield almost ?1.78 Trillion of total Government revenues, accounting for 8.3% of total revenue receipts in 2003.
For these reasons, we are advising NDC MPs to vote against the TOR Debt Recovery Bill that is currently before the House if it is to result in any higher prices for petroleum products than those already existing.
Ladies and Gentlemen of the Press,
I must also mention the ?170 per litre of the prices of petroleum products built into the existing prices and collected and allegedly paid into an escrow account since January 17, 2003.
In an earlier Urgent Statement on the floor of the House, NDC Minority Chief Whip Hon. Doe Adjaho made reference to the Constitution’s prohibition that “no taxation shall be imposed otherwise than by or under the authority of an Act of Parliament”.
Whether described as tax, levy, margin or whatever, we find this amount not to have been authorised by Parliament and repeat our call on the Government to refund these illegal collections to consumers through the simple expedient of selling petroleum products at prices less by ?170 per litre for the quantity of fuel that has been pumped out since January 17, 2003.
Ladies and Gentlemen of the Media,
In the 2003 Budget, VAT, against which the NPP in opposition staged anarchic and violent demonstrations in 1995 in which 4 people lost their lives, is to be increased in a most non-transparent manner. From our analysis, there is a 5% VAT increase built into the Budget out of which 2.5% is to be used as contribution to the proposed National Health Insurance Scheme.
The idea of the National Health Insurance Scheme, which is an NDC initiative, is laudable, and we are agreeable to Government contributing to support the Scheme, but we are opposed to any back-door increase in the rate of the VAT. The NPP as you are all aware opposed the introduction of the VAT at 17.5% and forced its withdrawal. The NPP opposed its later reintroduction at 10% and the subsequent increase to 12.5%. For the same NPP to decide not only to retain the tax once it finds itself in power, but to increase it to the original 17.5%, is to say the least hypocritical, deceitful, immoral and unconscionable.
Knowing the moral indefensibility of its position, the NPP Government did not have the courage to call VAT by its name in the Budget but described it as “a contribution on expenditures and transactions”.
Additionally, 2.5% of workers’ SSNIT contributions is also to be applied to the National Health Insurance Scheme. Thus under the pretext of the National Health Insurance Scheme, the NPP Government is reducing workers’ pension and at the same time decreasing the purchasing power of Ghanaians through an increased VAT.
This, I am afraid, is a betrayal of the workers and people of Ghana. When the NPP said that they were going to abolish the ‘cash and carry’ system, they did not say that it was going to be at the expense of workers’ pension and at the expense of an increased VAT.
Ladies and Gentlemen of the Press,
There are many other tax increase measures in the Budget whose overall impact will be the imposition of extreme hardships on the people. They include the increase in the daily income tax paid by commercial transport operators which will translate into higher transport fares, the upward revision of rates and fees charged by the various Ministries, Departments and Agencies for services rendered to the public, the extension of the National Reconstruction Levy for 3 more years, and the increase in duty on some imported finished products.
Based on the list of Ministries, Departments and Agencies proposed in the Budget whose charges are to go up, it is reckoned that fees and charges for building permits, registration of Companies, drivers’ licences, passports and several others which were all recently increased, are to be increased yet again. Even the dead are not spared and left to rest in peace. The prices of wreaths sold by the Parks and Gardens Department will also go up.
The extension of the National Reconstruction Levy for 3 more years is in particular a most regressive step in fiscal policy. In one breath, the NPP Government promises to make more credit available to the private sector. In another breath, it extends the additional 10% National Reconstruction Levy imposed on the Banks for another 3 years. When you take away more of the funds available to the Banks for lending to the private sector through the backdoor tax of the National Reconstruction Levy, how are they expected to have more money available for lending?
The Government has subsequently sought to justify this action by saying 25% of the revenue so accrued would go into setting up a venture capital fund. It is our view that this could easily have been arranged with the banks without recourse to additional taxation.
It is now acknowledged worldwide that high taxes and high fees and charges act as disincentives to the development of private business. That is why from 1986 to 2000, during most of which period I was IRS Commissioner, corporate and marginal tax rates were dropped progressively from 65% to 30% and customs tariffs were similarly reduced.
The increased taxes, fees and charges in the Budget undermine the NPP’s whole concept of the so-called ‘Golden Age of Business’.
For these reasons, when elected President next year, one of my first acts will be to review the back-breaking taxes and tax increases introduced in the 2003 Budget.
Ladies and Gentlemen of the Press,
We have taken note of the regrettably small minimum wage increase of 28% that was announced in the Budget whilst all other prices and costs went up in excess of 80%. Clearly, the minimum wage is incapable of taking care of the very modest daily expenditure of the average Ghanaian family.
Meanwhile, we are yet to know the salary adjustment for public and civil servants whose living conditions are deteriorating under the weight of the transport fare hikes, the rent increases, the rising cost of food, and all the other unconscionable increases in the cost of living.
We have also taken note of the fact that the next phase of the increases in electricity tariffs and water rates take effect this month and when reflected in the April bills, will no doubt constitute a major additional financial burden on the average Ghanaian household. Indeed, the proposed increases in petroleum prices and the VAT will definitely result in increases in the rates of electricity and water over and above the already programmed increases. Ghanaians are in for very hard times, thanks to the NPP Government.
We have indeed also taken note of the notice given by the Ghana National Association of Private Schools (GNAPS) that the school fees of all private schools will be going up in May. We are aware that the public schools will be following suit soon. We are also aware that with the increases in VAT, petroleum prices, electricity and water rates, Senior Secondary School fees will be going up next term. University academic user fees are bound to follow suit.
A bag of cement now sells at ?45,000, up from ?20,000 in 2000. Landlords have raised their rents and many tenants who cannot afford to pay the higher rents are being ejected. The phenomenon of homelessness is being added to the growing list of social problems that the NPP Government is leaving behind for the NDC to come and solve.
Ladies and Gentlemen of the Press,
Some of you may be wondering why, in the face of all these hardships, the NPP has nevertheless won the bye-elections held so far. The answer is simple.
The NPP has created an atmosphere of such pervasive fear and intimidation that our people believe that if they do not do their bidding, they will be done in. So workers are afraid. Civil servants are afraid. Contractors are afraid. Businessmen are afraid. Even chiefs are afraid. Why should voters too not be afraid?
Besides, voter bribery both in cash and in kind, community bribery through sudden Government facilities and development projects, and the provision of top officials with luxury vehicles as part of electioneering have become a feature of these bye-elections.
Electoral fraud has involved the use of policemen without identification and non-policemen posing as policemen, transportation of illegal voters from other constituencies who are then issued with new identification cards for purposes of impersonation, and the intimidation of officials and supporters of opposition parties by the introduction of macho men and other thugs who provide cover for what are essentially election stealing activities.
All these amount to vote buying and intimidation, offences under election laws of all democratic countries. Together, they rob the people of the right to freely choose their representatives. They render meaningless the underlying democratic tenet that the will of the people prevails in a democracy.
So the NPP may have won the bye-elections. Let us wait and see if they can buy or intimidate the entire country come the General Elections next year. I can assure you that they cannot, and we shall win.
Ladies and Gentlemen of the Media,
The Budget Statement bemoans the fact that “the contribution of lotteries to the total domestic revenue has fallen drastically over time since 1975”. The Budget Statement then states that the problems associated with lotteries in Ghana have rendered the industry unproductive and therefore proposes to repeal PNDCL 223, which will outlaw the activities of private lotto operators.
The truth, however, is that better tax tools such as VAT and Petroleum Tax which did not exist in 1975 have evolved since then, hence the declining importance of lottery revenue to the national revenue effort.
In any case, the NDC is opposed to the abolition of private lotto because it is inconsistent with the NPP Government’s own appointment of a Games Commissioner who is supposed to regulate competition within the industry. It is against the NPP’s concept of ‘wealth creation’, as the lotto business enables many more individuals to accumulate capital that they then invest in productive ventures. Its abolition will impact severely and adversely on the unemployment situation as the livelihoods of hundreds of thousands of the lotto agents and the employees and their dependants depend on the industry. What happened to the NPP’s ‘Golden Age of Business’ and much vaunted support for the private sector?
The evolution of the ‘banker to banker’, which was one of the major reasons for the liberalisation of the lottery business, shows that you cannot enforce a ban on the private lotto business. It will simply be driven underground and the security measures required to police the ban do not make it cost-effective. The resultant effect will be the criminalisation of the large number of Ghanaians who will be tempted to engage in this then illegal activity, diverting the attention of the security agencies from legitimate security pursuits and clogging the law courts with unproductive lotto cases.
In an era of privatisation and divestiture, it is surprising that the NPP should be pursuing a policy of nationalisation of the lottery business.
For these and several other reasons, NDC MPs will be advised to vote against the Bill to restore the monopoly of the lottery business to the State when it is introduced in Parliament. Should they fail and the NPP majority passes the Bill, I wish to serve notice that the next NDC Government will introduce a new Bill to liberalise the lottery industry and allow for private participation in the lottery business.
Ladies and Gentlemen of the Media,
The Government’s decision to defer payment of the District Assemblies’ Common Fund and the Ghana Education Trust Fund arrears and spread it over 3 to 5 years is in our view unconstitutional and illegal.
With respect to the District Assemblies’ Common Fund, payment is required to be in quarterly instalments. With respect to the Ghana Education Trust Fund, the VAT Service is required to pay the 2.5% VAT revenue directly into the GetFund’s bank account within 30 days of collection. The money is not even supposed to pass through Government accounts.
None of the operative enactments makes for deferred payments. The Budget’s proposal to defer payment of the arrears is therefore unconstitutional and illegal.
It is particularly unacceptable that payment of these Funds which are constitutional and statutory obligations are being deferred, whilst HIPC funds which are discretionary payments are rather being timeously released and disbursed.
In the very scheme of things, the District Assemblies’ Common Fund and the Ghana Education Trust Fund take priority over the HIPC funds. They impact directly on district level development priorities as determined by the people through their District Assemblies. HIPC funds, which are expended at the discretion of the Central Government and the District Chief Executive, do not express such democratically expressed local priorities.
If the Government does not take steps to reverse its unconstitutional order of things by according priority to the two statutory Funds, the NDC will take steps to ensure that the Constitution is complied with.
Ladies and Gentlemen of the Press,
The NPP Government is indeed on the way to building a ‘property owning democracy’ in which only the rich and property owners can survive. If the Government does not take care, Ghanaians will soon collapse under the pressure of the all-pervasive price increases within the economy. What we are not sure of is what will be the last straw that will break the back of the Ghanaian.
The NDC as the largest opposition Party and the Government in waiting however has a responsibility to ensure that the back of the Ghanaian is not broken. We therefore have a responsibility to make sure that that last straw is not placed on the back of Ghanaians by the NPP Government.
Ladies and Gentlemen of the Media,
The NPP’s 2003 Budget has made a fundamental policy choice whose impact is particularly harsh and we are being called upon to pay the price for the failures of the Government.
The neglect of the Government to do its constitutional duty of managing the economy and the national budget but to chase after the mirage of the US$1 Billion IFC loan led to the creation of a massive deficit in 2002. To create the conditions for a new IMF loan this year, the NPP Government is proposing that there should be no deficit this year.
But why should we go from a ?2 Trillion deficit to zero deficit in just one year? Why should we achieve single digit inflation in one year? Why should ordinary Ghanaians be paying dearly for the incompetence and naivet? of NPP Government officials? These are some of the reasons why the NPP Government has introduced harsh new taxes and proposes to increase a number of existing taxes.
There is a saying that “the operation was successful, but the patient died”. Reform is good. Tight economic measures are sometimes necessary, but they must not be unfeeling and unnecessarily painful. It would appear that political power has so cocooned the NPP that they have taken the patience of Ghanaians for granted and have so soon forgotten where they came from and the promises that they made.
Ladies and Gentlemen of the Press,
I have deliberately avoided discussion of these and other measures in the Budget which are mostly for the macro-economic analysts – inflation, exchange rate, interest rates, money supply, domestic borrowing, etc, because the ‘bread and butter’ issues affecting the ordinary Ghanaian today are the most critical issues. We must be alive to work to attain those macro-economic objectives and targets. The way the NPP Government is going, I am not sure that many Ghanaians will indeed be alive next year to vote them out.
No Government has ever had it so good as the present Government as far as the external economic environment is concerned. Cocoa prices are at a 20-year high at about US$2,200 per tonne. Gold is pushing US$370 an ounce. Crude oil stabilised around US$18 per barrel until the latter part of 2002 when the USA threat of war against Iraq pushed it up to US$30 per barrel. The President himself reported remittance inflows of some US$1.3 Billion.
Yet the inefficiency, incompetence and corruption of the NPP Government have disabled it from taking advantage of these opportunities to better the lot of Ghanaians.
The Party spent most part of last year chasing the mirage of the so-called US$1 Billion ‘IFC’ loan. The Sahara Energy Company oil lifting deal, the suspicious Castle and Ministerial bungalows rehabilitation scandal, the purchase of bullet-proof vehicles for the President at a cost of US$500,000, the numerous Presidential trips abroad, put at about 60 at the last count and still rising, and a conservative estimated cost of about US$7 million, the purchase of a US$90,000 S-Class Mercedes Benz car for the Speaker, the importation of ?3.2 Billion worth of mango seedlings by the Minister of Lands and Forestry in the dry season which perished, the huge amount of money spent on the countless number of Presidential Staffers and Special Assistants – all these have combined to run the economy to the ground.
Instead of working to keep the economy on an even keel, the NPP Government takes refuge in media and propaganda ‘spins’ and on creating diversions from the economic plight of today’s Ghanaian.
The diversions are many, ranging from the arrest and interrogation of harmless citizens like little Miss Dzidzor Tay and GCPP Leader Mr. Dan Lartey for daring to call for early elections, to the Fast Track High Court trials.
The revision of constituency and district boundaries can be guaranteed to arouse heated debate and passionate arguments, in some cases with negative ethnic and political undertones, which will keep many minds diverted from their empty stomachs.
The biggest diversion of them all is the National Reconciliation Commission whose proceedings to date appear to confirm the public perception that it was created to serve a special agenda.
But we refuse to be diverted. I am therefore using this opportunity to advise the NPP Government to ease the economic and financial pressure on our people.
The people just cannot and will not bear any more of the crushing yoke of price and cost increases. Petroleum prices have gone up and are going up yet again. VAT is going up. The Daily Transport Tax is going up. These three alone are bound to send transport fares up.
On the services side, the cost of doing business with Government is going up with the proposed increases in the charges for services provided by Ministries, Departments and Agencies. Electricity tariffs are up and are going up. Water rates are up and are going up. School fees are going up. Rents are already up and will be going up again soon.
Within the two months since January 17, 2003 when fuel prices went up by almost 100%, the cost of living has more than quadrupled for the ordinary Ghanaian, yet all that the Ghanaian worker has to show for it by way of compensation is a puny 28% increase in the minimum wage. As for the unemployed, I do not know how they are supposed to survive.
Surely, this is not the ‘positive change’ that the NPP promised Ghanaians. This is ‘change for death’, but Ghanaians refuse to die. That is why they have been crying to the NDC for salvation.
As flagbearer for the NDC, I can no longer ignore the persistent calls from Ghanaians from all walks of life to lead them in a peaceful “March for Survival”. Ordinary Ghanaians are going to exercise our constitutional and democratic right to show in no uncertain terms our disapproval of the intolerable and worsening economic conditions into which we have been forced by the NPP Government.
Ladies and Gentlemen of the Media,
I want to thank all of you once again for responding to our invitation. I urge you to look at the current national situation with an open, objective and impartial minds and join us to provide a voice for our now voiceless compatriots.
Thank you, and God bless you.
