VAT may go up

President Kufuor’s long awaited 2003 Budget was finally presented to Parliament by Finance Minister Yaw Osafo-Maafo on Thursday 27 February 2003 , two clear months after the financial year ended.

After inflicting a 95 per cent increase petroleum products prices on Ghanaians on 17 January 2003 , President Kufuor is going to impose even greater hardships on the already long-suffering and suffocating Ghanaians.

VAT goes up

In doing this, the Kufuor government is behaving like the obedient pupil of the IMF that it has learnt to become since the IFC fiasco. In a letter to President Kufuor from the IMF Managing Director, Anne Kruger, dated 14 November 2002 , the IMF stated, “we greatly appreciate your clear statement that the envisaged VAT increase will be part of the 2003 budget package.”

In other words, President Kufuor has agreed with the IMF to increase the VAT rate! And Yaw Osafo-Maafo’s 2003 budget has actually factored in a 5 per cent increase in the VAT rate to raise it from the existing 12.5 per cent to 17.5 per cent.

And, it has done so without explicitly stating so in the budget, obviously because the ghosts of Ahunu Honger and the three other persons who died in their senseless anti-VAT demonstration of 1995 are still haunting them.

On page 155 of the Budget Statement is a revenue item titled ‘Other Revenue Measures’ for which a provision of ?1.687 trillion has been made. It is under this revenue head that the additional 5 per cent VAT increase, which would yield ?1.23 trillion has been hidden.

Kufuor’s NPP government has perpetrated this deceit because they know very well that without the 5 per cent VAT increase, they cannot have an IMF programme. At the same time, they know also that they risk social unrest if they increase the VAT rate because of the anti-VAT Kume Preko demonstrations they organised in 1995, which led to the deaths of innocent citizens.

It will be recalled that it was the fixing of the VAT rate at 17.5 in 1995 that led to the infamous and senseless Kume Preko demonstrations organised by today’s rulers of Ghana in which four people died, leading to a withdrawal of the tax by the NDC government.

Fuel prices go up

On page 136 of the Budget Statement, it is stated that ‘a Debt Recovery Levy’ will be imposed on the use of petroleum products’. On page 164, it is further stated that ‘to ensure the achievement of full cost recovery as well as to help pay off the accumulated debt of TOR over time, a Debt Recovery Levy on petroleum products, at the rate not exceeding ?640 per litre (?2,900 per gallon) across board will soon be laid before Parliament.

The introduction of this levy will yield about ?450bn which revenue has also been hidden under the ‘Other Revenue Measures’ revenue head. We ask ourselves, is it that an additional 5 per cent increase in VAT together with an additional ?23,000 per gallon of petrol will lead to a reduction in inflation rate down from 15.2 per cent at the end of 2002 to 9.0 per cent in 2003 as projected in the Budget.

Or is the Kufuor government simply testing the tolerance limit of Ghanaians? Some ‘aseehonomis’ indeed.