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Business News Fri, 30 Jun 1995

AFTER VAT, WHAT NEXT?

That the NDC government, through the Minster for Finance and Economic Planning, Dr Kwesi Botchwey, last Wednesday withdrew the VAT Amendment Bill which was before Parliament and announced the suspension of the VAT in the face of mounting public outcry against the new tax system deserves commendation.


Again, the fact that for the first time in the history of the Rawlings administration the government has yielded to public pressure and suspended a major economic policy which was being implement is an indication that Ghana's democratic experiment is maturing into a democratic reality.


Even though Dr. Kwesi Botchwey told newsmen after his encounter with Parliament that the withdrawal of the VAT per se would not bring down prices of goods and services, we are of the opinion that at least it has reduced the tension that was building up in the society, thus providing the much-needed congenial atmosphere to consider available alternatives.


Dr Botchwey explained that other factors such as the 46 per cent increase n liquidity, the ever depreciating value of the cedi, and shortfalls in food production last year are all to blame for the high cost of goods and services.


While the Finance Minister cannot be wholly blamed for the shortfall in food supply last year considering the fact that some of the contributory factors are beyond his control, the CHRONICLE believes that the Minister cannot escape blame for the excess liquidity in the system and the fast depreciation of the cedi which has culminated in inflation and its attendant high prices of goods and services.

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The CHRONICLE, therefore, calls on the Minster to accelerate measures to reverse the situation to ensure reasonable prices of goods and services for Ghanaians.


It is our hope that DR. Botchwey's earlier pledge to check drain-pipe institutions like the GNPC in order to instil financial discipline into the economy will be executed with the faithfulness and seriousness that it deserves.


It is rather unfortunate that over the years retrenchment of public sector employees has become the sole measure for controlling government expenditure.


That this scape-goat measure has brought no relief to the economy is attributable to the fact that much greater waste goes unchecked at the very top of national administration.


Ghanaians did not reject VAT because it was called VAT, but rather because it brought untold hardships into the country.

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If the VAT is suspended or even completely withdrawn and positive measures are not taken to mitigate the suffering of the people the tension is sure to persist.


What is more, if the new Sales Tax and Service Tax bills proposed to replace the VAT law carry rate levels as high as the 17.5 per cent of the VAT, they will not give Ghanaians the needed relief, and will most likely be resisted.


Now that Ghanaians have become wide awake, it will be very difficult, even foolhardy, for the government to use any back-door economic measures to impoverish them any more.


Development in the form of infrastructure, which the government keeps bandying about, and for which reason it is over-taxing the people, is of no use if there no people to make use of them, or even if such facilities are far beyond the means of the people because of dwindling incomes. The people of Ghana deserve to live as humans.

Source: GHANAIAN CHRONICLE