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Sun, Dec

STATESMAN OPINION: TAXES, SUBSIDIES NECESSARY EVILS

Business & Economy

According to the Collins English Dictionary, a tax is an amount of money that you have to pay to the government so that it can pay for provision of public services.

According to the Collins English Dictionary, a tax is an amount of money that you have to pay to the government so that it can pay for provision of public services.

 

Governments all over the world have a duty and a responsibility to provide some stipulated services to its citizenry, including health and education as well as extension services; water, electricity, transport and communication. The sole means of financing or paying for these services are through taxation.


It is not the delight of government to tax its citizenry persistently as taxes diminish the welfare and the standard of living of the citizenry. But it is also necessary on the part of government to impose these taxes as and when it becomes essential to enable it pay for the public services it renders unto the citizenry.


On other hand, naturally, the citizenry abhors paying taxes and try all means to evade it for the basic reason that it erodes their financial strengths and impacts negatively on their purchasing power. Hence, reducing their standard of living. However, the citizenry have no option than to also pay so long as they expect and rely on the government to continue to render public services unto them. So, in regards to this convergence, taxes are necessary ‘evil.’ The country can, therefore, not exist without the payment of taxes.


On the contrary, subsidy has been defined as the transfer of money from the government to an entity. The objective of subsidy is to bolster the welfare of the society. It is a part of non-plan expenditure of the government. It is therefore very difficult for governments to give out monies to the citizenry except on the basis of our welfare.


                                                   No government is magician


Knowing very well that governments do not conjure money from anywhere, anything therefore thatgovernments give out is from us citizens. So, the more we give out, the more it gives out. The little we give out, the little governments give out. The citizenry delights in enjoying subsidies, but abhors paying taxes. Governments delight in procuring a better welfare for it citizens, but consider it very difficult to tax its citizens. Where then is the converging point?

The two are indeed necessary ‘evils’ and it is our duty as a country to find the point of equilibrium. We must find a better way around this to ensure the sustenance of our dear country and the several development projects it is required to put in place year by year. Unfortunately, the major problem this country seems to have is that we have been blinded by political emotions and sensibilities that prevent us from analysing issues objectively. We always rope in political sentiments when issues of national nature come to the fore.


                                                           Speculation


Based on mere speculation, the entire country learnt of a possible VAT increment from the current 17.5% to 21%. There has been consistent public outcry in response to this speculation as well as a terrible backlash at the governing New Patriotic Party (NPP). Some sections of the divide, including the quarters of the opposition, are sentimentally insinuating that government promised to give relief to Ghanaians and not to further impose taxes to worsen their plight. It is fair and objective to ask. Has the government not done enough to prove the intention behind its promise? Certainly, yes.


Numerous intervention programmes as the implementation of the Free Senior High school; Nation Builders Corps (NABCO); restoration of teacher and nursing trainee allowances as well as free registration of BECE candidates involve cash that must be made available by government. So are other safety net programmes like reduction in electricity tariff that benefit poor domestic users as well as the equally disadvantaged informal economy players like iced water sellers and barbers.


Indeed, there has been some appreciable level of relief that benefits us all and which information we need to spread to people as we engage in healthy political discourse. Such amounts paid by government into the economy in the form of subsidy were supposed to have been taken from the economy in the form of tariffs or levies or fees paid by citizens to government. I recently overhead a deputy Minister saying that government has so far expended over GHC 556m on the Free SHS initiative alone. This is quite a huge amount and this tells the commitment of government to relieve Ghanaians of their plight.


Meanwhile, as per the ideological stance of the major opposition party in Ghana the NDC, they are the ones supposed to be dealing with such social policy initiatives and programs as they call themselves ‘Social Democrats’.


                                                 NPP better Social Democrats


But what do we see? They have failed to live by the tenets of their ideological positioning. So, the New Patriotic has no option than to combine that aspect to their ideological positioning to ensure citizens do not fall short of that. So,it is not surprising why every major social intervention programme there is in Ghana now emanated from the quarters of the New Patriotic Party; talking about the National Health Insurance, the Capitation Grant, School Feeding programme and a lot more.


Truly, government said it was going to shift the focus of the economy from a taxation one to a production one. The opposition should tell us if taxes do not exist in production-oriented economies. The fundamental logic in what government said was not to solely think of taxation as the means of generating revenue for government as it over burdens the citizen; but to have a diversified means of revenue generation. This is why government seeks to boost the industrial base of the economy so that in so doing, taxes as income tax, corporate tax, value added taxes, etc would increase to serve the larger needs of the economy. It does not literally mean that when you have a production-based economy, taxes would cease to exist. I can boldly say that government is doing just that and it Is just a matter of time for the goodies underlying the entire policy initiative regarding the production orientation to burst out for all to see.


                                                        Being realistic


If we will all be honest and real in our judgments, we cannot begin to see results in this policy initiative just for the sake of what experts say is ‘time lag’. In simple terms, factories cannot be established for it to start yielding financial results for government to reap in revenue in just 18 months of assuming the reins of office. Sometimes, we have to be realistic enough in being in opposition to tell the truth to our supporters. After all, Ghana belongs to all of us and so, no matter the extent of our desire to capture political power, there should be some sincerity and decorum in our discourse, so that Ghana will win at the end of the day. We must not lose sight of the fact that achieving a balanced scorecard in any endeavor is always far from plausible because of scarcity. It is most difficult when your predecessor messes up and leaves the mess for you to contend with.


When you find yourself in such situation, you set priorities and make choices. Any leader worth his or her salt has a vision and a mission. However, striving to ensure that your vision materializes require you to ensure a balance of a sort. I believe this is why the President is striving in the midst of scarcity and challenges to make ends meet. Let us rally behind him in support than to whine continuously to distract him.


Concluding my writing piece, the holy scripture the Bible admonishes in Luke 12:48b (GNB), that “from everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked”. The two necessary ‘evils’ come into play here (tax, subsidy). We need much more subsidy, whiles government needs much more tax. I stated in the preceding paragraphs that, if we give much to government, government will give much in turn. But if we give little, little will be given unto us.


                                                         Sowing seeds


Even in the midst of scarcity, government is doing all it can to give us more unlike our previous experience. Why not turn to give more to complement its efforts. Additionally, a little was bequeathed to the President by his predecessor stifles any intent on the part of the successor to provide more than necessary. Ironically, today, we appear to be demanding much from him, when little was given him.


This contravenes the diktats of the Holy Scripture. And in that regard, the opposition must spare us the discord as they took more into their tenure to check what resources they left as a legacy. Much more was bequeathed unto them by the NPP government in 2009 compared to what was left the NPP in 2017.


These are the lines along which we as citizens must demand accountability from our leaders. I also want to suggest that transitional reports must be published for every Ghanaian to see, as such reports maybe likened to a balance sheet in the corporate world. If we can label Ghana as a corporate entity, why shelve transitional reports. I believe when we do this, it will help shape up the way we do politics and also do away with any unnecessary politicking in Ghana’s political landscape as such records will make public what was and what had been handed over to a successor government.

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