Dr. Gideon Boako, the Member of Parliament for Tano North, has expressed his belief that the incoming National Democratic Congress (NDC) government will likely introduce new taxes in its first budget presentation. He bases this prediction on the NDC’s stated intention to abolish the existing tax on betting winnings and the Electronic Transaction Levy (E-Levy), both of which contribute to government revenue. Dr. Boako argues that removing these taxes without replacing the lost revenue would create a significant shortfall, forcing the government to seek alternative sources of income through new taxation. He contends that these new taxes could potentially be even higher than the ones being abolished, placing a greater burden on citizens.
The discussion surrounding potential tax changes stems from statements made by the Finance Minister-designate, Dr. Cassiel Ato Forson, during his appearance before Parliament’s Appointment Committee. Dr. Forson indicated his commitment to abolishing the betting tax, characterizing it as a “nuisance tax.” This pledge, while potentially popular with the public, has raised concerns about its fiscal implications. Dr. Boako argues that such a move, coupled with the removal of the E-Levy, would necessitate the introduction of new taxes to maintain revenue streams and meet the government’s financial obligations.
Dr. Boako characterizes the NDC’s position as typical political maneuvering, designed to appease the public by fulfilling campaign promises. He argues that while politically expedient, scrapping these taxes without a clear plan for revenue replacement is fiscally irresponsible. The MP highlights the importance of maintaining a balance between debt service burden and revenue generation, a key element of the International Monetary Fund (IMF) program that Ghana is currently under. Removing significant revenue sources like the betting tax and E-Levy without corresponding increases elsewhere would disrupt this balance and potentially jeopardize the country’s financial stability.
He emphasizes that the government’s commitment to fiscal responsibility, as outlined in the IMF program and debt sustainability analysis, requires a careful balancing of revenue and expenditure. Scrapping taxes without a clear alternative revenue source would create a financial gap that must be filled. Dr. Boako’s contention is that the NDC will be forced to introduce new taxes to compensate for the revenue lost from abolishing the betting tax and E-Levy. He warns that these new taxes could potentially be higher than the ones being removed, negating any perceived benefit to the public.
Dr. Boako’s argument rests on the premise that the NDC’s promises to abolish existing taxes are driven by political considerations rather than sound fiscal policy. He suggests that the party is prioritizing short-term political gain over long-term economic stability. By scrapping taxes without a concrete plan for revenue replacement, he argues, the government is creating a situation where new and potentially higher taxes become inevitable. This, he believes, will ultimately place a greater financial burden on the citizens the NDC is ostensibly trying to appease.
In essence, Dr. Boako is cautioning against the potential negative consequences of politically motivated tax cuts. He emphasizes the importance of responsible fiscal management and warns that the removal of existing taxes without adequate replacement measures will inevitably lead to the introduction of new, and possibly higher, taxes in the future. He urges the public to be vigilant and scrutinize the upcoming budget closely, anticipating the introduction of new taxes despite the NDC’s promises to abolish existing ones. He believes that the true test of the NDC’s fiscal responsibility will lie not in fulfilling campaign promises to scrap taxes, but in how they manage the resulting revenue shortfall and ensure the long-term financial stability of the country.
