Associate Editor Emmanuel Akli on trading of words over Duffuor’s Budget
The decision by the government to increase taxes as contained in the 2011 Budget Statement presented to Parliament last Week Thursday, has incurred the wrath of members of the opposition New Patriotic Party (NPP), who are accusing the ruling party of reneging on its electoral pledge not to increase taxes.
A policy advisor to the party, Mr. Kwaku Kwarteng, told The Chronicle in an interview in Accra on Monday, that the ruling National Democratic Congress (NDC) government had no justification to increase taxes, after accusing the NPP of resorting to excessive taxation.
The government has indicated its intention to increase the Tema Oil Refinery (TOR) recovery levy from 0.2 to 0.8 pesewas. The tax holiday, which real estate developers used to enjoy, has also been withdrawn, in addition to the introduction of an environmental tax.
According to the Government Spokesman on Economic Affairs in the Kufuor Administration, the NDC government clearly underestimated the size of Ghana’s economy, and went overboard to make all manner of promises.
“On page 42 of their 2008 election manifesto, they state: An NDC government will take over an economy in a state of total paralysis. The scope and severity of the paralysis are: the national debt of ¢90 trillion, up from 41 trillion at the end 2000, excessive taxation, and high cost of living.”
“The equivalent of the ¢90 trillion national debt the NDC stated was US$9 billion. Once the NDC came into office, they reported in paragraph 96 of their 2009 Budget Statement, that the national debt was US$8 billion, much less than the US$9 billion they had earlier thought,” he said.
According to Kwaku Kwarteng, in paragraph three of the Memorandum of Economic Policies, 2009 – 2012 signed by the NDC Government on June 26, 2009, they made the following admission:
“Real GDP growth increased steadily from 3.7 percent in 2000 to 7.3 percent in 2008. This growth was fostered by significant debt relief, which provided the country with fiscal space to embark on critical infrastructure investments, particularly, in the energy and road sectors, as well as targeted social spending, all under the Ghana Poverty Reduction Strategy (GPRS). The combination of higher output growth, declining inflation, and improved social spending under the GPRS framework, contributed significantly to lower poverty levels. The national incidence of poverty declined from 39.5 percent in 1998/99 to 28.5 percent in 2005/06. At this rate, Ghana is poised to achieve the Millennium Development Goal (MDG) of halving extreme poverty ahead of 2015.”
This, he noted, was the testimony of the NDC about the legacy of the Kufuor administration. “Obviously, the recent explanation that they are unable to fulfill their manifesto promises because they underestimated the problems of the economy they inherited, is nothing, but a flimsy excuse.
What government needs to do is to admit that they are not finding their way clear, show a little humility, and ask for ideas. After all, Ghana is for all of us,” he added.
But, the Deputy Chief of Staff, Mr. Alex Segbefia, disagrees with Kwaku Kwarteng, insisting that the NDC was not giving flimsy excuses.
In an interview with this reporter, the Deputy Chief of Staff said the Atta Mills administration had come to realise that all figures that the NPP were putting out, which the NDC quoted in its manifesto pledges, are all false. To him, the NPP must rather be blamed for deceiving the public with non-existent figures, and not the NDC which used it to formulate its policies.
According to him, the NPP was shouting from the rooftops that the budget deficit was 14.5%, but when the NDC took over the reins of the country, it realised that the budget deficit was rather over 20%, and not the 14.5% they were made to believe.
Segbefia made reference to an encounter he had with one of the NPP Members of Parliament (MP), who alleged that the Atta Mills government did not include statutory commitments in the 2011 budget, and that the budget deficit could go as high as 25% if these commitments are added.
He regretted that during the Kufuor administration they never added statutory commitments to the budget, but now that the NDC was in power, they had decided to add it. This, he noted, was not the best way to do politics.
He contended that the removal of the housing allowance, and the introduction of the environmental tax, were meant to serve the best interests of Ghanaians, and nothing else, and called on his political opponents to stop doing politics with it.
Alex Segbefia was also not happy with attacks on the government by NPP stalwarts that the Mills’ administration had failed to initiate pro-poor policies.
According to him, the National Health Insurance Scheme (NHIS), the Free Maternal Care, School Feeding Programme, Micro Finance and Small Loan Centre (MASLOC) were all best pro-poor policies initiated by the Kufuor government, but the way these policies were implemented was not the best.
“The NDC government has, therefore, decided to strengthen these policies to serve the best interests of Ghanaians, instead of initiating new ones,” he said.