Kofi Anokye is the CEO of Koans Group of Companies
Att: Ken Ofori Atta and Prof. Addai
This article is in response to recent statements made by the Finance Minister, Ken Ofori Atta, to the effect that the e-levy is a better alternative to going to the IMF. A misguided statement unfortunately backed by the former Rector of GiMPA, Prof. Stephen Addai
I am especially concerned about the old professor's viewpoint because, along with Ken, he presided over the disastrous economic management that has led to the nation's finances being in this state and would seize any opportunity to shift blame.However, Professor Stephen Addai is a man I expect to be transitioning to statesmanship and hence should not be seen to be participating in dancing to the deceptive choruses of politicians, especially failed ones.
The failure to see through the fact that the e-levy will not meet the threshold of tax neutrality is in and of itself a gross act of incompetence on the part of the Finance Minister and the government.
These misleading statements from both the Finance Minister and the former Rector of GIFMA have compelled me to write this, both to correct some misconceptions about going to the IMF and to address the shameful attempt to blame Ghanaians for our current situation.
To blame our going to the IMF on the fact that Ghanaians have refused to pay the e-levy is a deliberate attempt by this dishonest government to shift focus from their own failings.
In any case, Ghanaians have every right to feel misled that what was to be an e-levy, IMF, or increase in tax ended up being: e-levy plus tax increment plus IMF.
It is worth noting that the major goal of every tax reform is to make it more NEUTRAL to achieve high compliance and ensure that negative impacts on economic choices are reduced to the barest minimum.
When this level is achieved, the implementers of such schemes are applauded for achieving tax neutrality because both the government of the day and tax payers are satisfied with the reformation. Achieving Tax Neutrality by any economist is therefore an important hurdle that must be crossed, and it takes the right strategy to achieve this.
The e-levy comes up considerably short when subjected to the tax neutrality test, hence the low level of compliance.
I believe that as a former board chairman of the Ghana Revenue Authority, Prof. Stephen Addai must have played a role in the implementation of e-levy, hence his eagerness to defend and support it. I want to re-emphasize that they have both failed Ghanaians sensationally and hence shouldn’t put the blame on the tax payer because tax avoidance is a legitimate tool at the disposal of the tax payer.
Anyone who imposes such taxes with so many loopholes for taxpayers to avoid without committing a crime should reconsider his tax note.E-Levy is at best a failure of the government to double, triple, and quadruple tax people.
That said, I support the decision to go to the International Monetary Fund; in fact, I am on record as having recommended it several times before the decision by the government to do so. I will outline my reasons, but before I do that, I want Ken and Prof. Addai to answer the following questions:
How much taxes will be enough for this wasteful government?
Can E- levy alone save the day in spite of the wastages?
How much money have been borrowed already and gone under the drain between January 2017 and now?
Is the government aware that borrowing is a form of TAXATION on the people? Well read your taxation books again.
I am firm in my belief that no matter how much money comes into the national purse through taxation, we need to go to the IMF and be subjected to their strict financial management programs.
The idea of going to the IMF is not to be given money alone but to force this wasteful leadership to be prudent in their fund management, and that is what most people have failed to see. Ken knows that he cannot continue to waste money like he has in the past six years, hence his reluctance to be part of the program.
The IMF will help us make the right economic decisions, which are necessary for borrowing. For a country with leadership that lacks fiscal discipline like ours. It is important that we have an externals regulator like the IMF to force us to get basic economic decisions right.
The IMF will not allow this government to continue wasting money on ineffective projects like One Village, One Dam, and Nation's Builders Corp. (NABCO), particularly in the manner in which they were implemented.
The financial sector clean up, the foundation upon which our current economic slump was built, would not have been implemented the manner it was under the IMF. Obviously not!! IMF will not supervise the borrowing of money to collapse banks. They would have provided better alternative, something some of us tried to do but were ignored in typical fashion.
This is why the business community is satisfied with the decision to seek help from the IMF because they will not just bring their expertise to the table; they will force us to do what is right. Left for me, we have to park the economic management of this country at the doorstep of the IMF because our leaders have proven to lack the requisite discipline and competence needed to run the economy.
The institution of the IMF is like a rehabilitation center for straightening out blockheaded leaders who have proven to lack the capacity to take the right economic decisions for their people. Why shouldn’t our leaders be there?
It is always said that "competent governments don’t go to the IMF for policy credibility. We are going there again after exiting just three years ago because our leaders lack the competence to manage the economy without a headmaster in the form of the IMF.
If the government didn’t want to go but had to renege on its decision, it means they were forced to do so because their strategies failed to yield the desired outcome. In any case, achieving high levels of tax compliance is in itself a measure of competence. So what is Ken talking about?
The initial target of revenue from the e-levy was 6.9 billion cedis a year, despite the figure being highly unrealistic. Even if compliance is 100%, it would still have amounted to nothing. This government borrowed an average of 25 billion cedis per year and was still unable to keep our economy afloat.
So Prof. Addai should tell the good people of Ghana, how would the e-levy have ensured that we scale past the financial challenges? How’d the e-levy ensure that the government takes the right economic decisions? How would the e-levy have curbed the wastage in the system? How would the e-levy have fixed the burden placed on us by the implementation of unproductive populist policies that put a lot of stress on our finances?
E-Levy could never have fixed the lack of application of basic economic knowledge in the management of this country.
In view of this, Ken should keep quiet and stop blaming the people of Ghana for our economic woes and the failings that have led us to the IMF. Prof. Addai should also preserve the little influence he has and focus on becoming a statesman instead of being a tool for defending bad governance.
We need the IMF more than ever; anyone who thinks it is all about revenue mobilization and borrowing is lost; it is more about helping us do things right than anything else.
This is the only way we can develop this beautiful country called GHANA.
God bless our homeland Ghana
Kofi Anokye, CEO
Koans Group of Companies