Government’s engagement of stakeholders and the public on yet to be implemented policies will allow for stakeholder inputs and give government the opportunity to address the concerns of the general public.
Recent happenings show that there is a lot we can do in that space. Let’s take a look at 3 examples of failed or unpopular policies introduced by the government as a result of the non-stakeholder engagement.
LUXURY VEHICLE TAX (LVT)
The recent mid-year budget review presented by the Finance Minister; Ken Ofori Atta scrapped the Luxury Vehicle Tax (LVT). As we commend the government for yielding to the plea of Ghanaians, this could have been completely avoided if stakeholder engagement and a bit of resource had been spent on research.
Figures available indicate that the revenue target for LVT was missed by more than 70%. This clearly indicates that there was no research or government business case study to ascertain the viability of this important environmental levy. For me, the idea behind this levy is brilliant; especially looking at it from the perspective of the environment and global warming. Sadly, it was poorly executed without any stakeholder and public engagement.
BENCHMARK VALUE REDUCTION (IMPORT DUTIES)
On 3rd April, 2019, the Vice President of the Republic of Ghana announced the 50% and 30% reduction in the benchmark values on imports. The main reason given by the VP in relation to the reduction was to reduce the incidence of smuggling and revenue enhancement.
Again, there were no stakeholder engagements. One important stakeholder that was left out of the decision process was the Association of Ghanaian Industries (AGI).
Since the introduction of this policy, we have had the Executives of the AGI expressing their frustrations to government about the impact of such a policy on the country’s manufacturing sector.
The wholesale benchmark value reduction of imports raises a lot of concerns; especially in the era of One District One Factory (1D1F), Development of Industrial Economic Zones and Industrial Sub Contractors. These initiatives are fantastic but where does all this fit in when reduction in Benchmark values will result in an influx of cheap imported finished products?
This wholesale implementation will make locally manufactured products including those for which we have the capacity and the comparative advantage face serious threat and unfair competition.
Writing as a person who works as a Management Accountant in the manufacturing industry, I can say you on authority that business case open business point to the direction of importing products rather than manufacturing them in Ghana. Hence if care is not taken, all of our already struggling factories will become white elephants and consequently cause our already high unemployment rate to increase. I suggest that government engage the AGI ASAP to address their concerns.
COMMUNICATION SERVICE TAX (CST)
Last but not least. The mid-year budget review led to a proposed increase in the Communication Service Tax (CST) from 6% to 9%. In terms of telecommunication and mobile phone penetration, Ghana is ranked among the fastest-growing in Africa. It, therefore, it makes it an easy tax revenue target.
The Chief Executive Officer of the Ghana Chamber of Telecommunications; Kenneth Ashigbey’s reaction to the announcement of this 50% increase, obviously points to the fact that the key industry stakeholders were kept out of the loop in the process leading up to this increase.
Even though the Ghana Chamber of Telecommunications was surprised by the proposed increase, they are still urging the government to open up for further deliberation and discussion to ensure it does not become counterproductive as we saw with the Luxury Vehicle Tax (LVT).
There is no doubt that these policy initiatives have great potential if they are executed appropriately. However, the lack of stakeholder consultations may render them impotent.
I therefore propose that government put together a think tank made up of tax and business professionals who will be able to come up with tax initiatives to broaden the tax envelope after intensive stakeholder engagement and put a stop to the lazy way of taxing such as the financial service tax and airline tax which stifle our development as a lower middle income country.