Economist and Finance Lecturer at the University of Ghana Business School, Godfred Alufar Bokpin has criticised government over some measures it introduced in the 2023 Budget.
This comes in the wake of government’s new measures it expects to help revive the economy in the 2023 Budget, as read by the Finance Minister, Ken Ofori-Atta on Thursday.
In the budget, Government announced a cut in expenditure, especially among political appointees and state institutions. It also planned to increase revenue by raising the VAT rate by 2.5 % while also improving its revenue collection.
However, reacting to the measures on JoyNews’ AM Show, Prof Bokpin said government failed to show leadership with its 2023 Budget when it failed to cut down its humongous government size.
According to him, the increment in VAT rate would be a drawback that would rather restrict growth.
He noted that, instead of increasing the VAT rate, government should have explored inefficiencies within the existing tax size.
This he explained is because “studies have shown that when your VAT rate is within 18% or above 18%, it significantly inhibits growth. In other words, it becomes counterproductive”.
“If you look at it effectively, at the implication of the VAT and the treatment of straight levy, it effectively puts the VAT burden on the consumer in excess of 20%. What that does is to contribute to the high production cost base of doing business and actually defeat every attempt to build savings mobilisation,” he said.
He added that although the country is in crisis, the government must also have the citizens at heart.
“The pain becomes more bearable when you find that the burden sharing is proportionately above household and the private sector. The government makes that decisive point when it failed to show leadership in downsising and greater realignment of State Owned Enterprises,” he said.