Professor of Economics and Director of Research at the African Center for Economic Transformation, Dr. Joe Amoako–Tuffour has cautioned named Finance Minister Ken Ofori Atta to resist the temptation of printing money to finance government expenditure.
According to him, such moves will have a dire impact on the fiscal stability of the government, since history has demonstrated it.
“First resist the temptation to rely on money printing to pay the bills. Fiscal induced money printing temper will worsen not mitigate your task. History has taught us much,” he stressed.
Already, the International Monetary Fund(IMF) as part of its conditions for an extended credit facility is pressing for zero financing from the Bank of Ghana.
Dr. Amoako-Tuffuor’s statement was contained in an open letter to the incoming finance Minister, if approved by parliament.
In addition Dr. Amoako-Tuffour cautioned Mr. Ofori Attah to carefully consider taxes that must be cut based on the burden it places on Ghanaians.
“Indeed, your manifesto leans toward tax cuts. But, except for the obvious – and short of a comprehensive look at what burden of tax individuals, small, medium enterprises and companies should fairly and reasonably bear – hurried tax cuts and exemptions will do little to boost productivity or spur growth”.
“Policy consistency, sequencing and a fine balance between equity and efficiency matter when it comes to sharing the tax burden to finance public enterprise,” he added.
He pointed out that the most important step to take is to improve the machinery of tax collection and to close the revenue escape hatches. “Next to customs duties, the management of direct taxes (profit and income taxes) is one of the weakest arms of the domestic tax system and it remains a major source of revenue leaks,” he cited.
He stated that evidence has shown that despite a promising beginning in the early 2000s, progress in domestic revenue mobilization has been in slow motion.
“The focus has not shifted from reforming legislation to implementing laws efficiently. Those who must collect the taxes and enforce compliance are not without blame. The corrupt and embezzlers of revenue collected have been winning,” he said.
He observed that behind the situation is ineffective accountability and partisan political interventions in the implementation of the tax system. “Your commitment to action to tackle institutional habits, leakages and escape hatches offers the best opportunity in the short run to realize more non-inflationary revenues”.
Dr. Amoako-Tuffuor argued that the accountability of public institutions and agencies, especially hospitals, tertiary institutions and the sports ministry in their collection and use of, and accounting for non-tax revenues, fees and charges, deserves immediate and closest attention.
He stressed that “these are public resources and must be submitted to public accountability”.
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