When the debate on the budget started yesterday, the Minority said the document offered no hope to the ordinary Ghanaian, given the current economic situation in the country, but the Majority said it offered the best answer to turn around the country’s economic fortunes.
Those who debated for the Minority Caucus included the Ranking Member on the Finance Committee, Dr Cassiel Ato Forson, and a member of the committee, John Jinapor. From the Majority Caucus were the Deputy Minister of Finance, Abena Osei-Asare, and Dr John Kumah.
For the Minority members, the budget failed to address the concerns of the people and would cause 2023 to be a year of misery as it would not alleviate the economic hardships facing the people and businesses.
Additionally, they argued that the budget, which imposed an additional tax burden on the people with the introduction of 23 different taxes, also failed to address alarming youth unemployment and would introduce financial depression with haircuts on domestic bond holders, jeopardising the future of bondholders, including pensioners who used their lifetime pension to invest in government bonds.
But the Majority Caucus said the budget would create one million jobs under the YouStart programme from 2022 to 2025, and therefore urged the Minority Caucus and Ghanaians in general to support the various revenue measures contained in the budget to help raise adequate revenue to stabilise the economy and improve on developments.
Many Majority MPs absent
What probably took the shine off the debate on the floor was the conspicuous absence of a number of Majority MPs.
It was not immediately known whether the absence of the MPs followed the previous positions taken by some aggrieved Majority MPs who expressed their unwillingness to participate in the budget debate and its subsequent approval if the President failed to dismiss the Finance Minister, Ken Ofori-Atta.
Mr Ofori-Atta was personally not in the House as he had on Saturday, informed the Speaker and the leadership of the House that he would travel to Germany for an urgent national assignment.
The Finance Minister moved the motion for the House to approve the Budget Statement and Economic Policy last Thursday.
Sense of hopelessness
Contributing to the motion, Dr Forson said the mood in the House and the streets across the country reflected how hopeless the nation had become.
He said it was no wonder that the Majority MPs had abandoned their own budget.
In his view, the economic challenge in the country called for urgent action but unfortunately Ghanaians were not seeing such action forthcoming from the President or the Finance Minister.
Dr Forson told the House that inflation that started in 2022 at 13 per cent was currently at 44 per cent, which meant that within 10 months prices of goods and services had gone up astronomically.
He said in the course of the year one could buy $1 with GH¢6.5 but today $1 was GH¢15.
On unemployment, Dr Forson said it was inching close to 50 per cent yet the 2023 budget failed to address that concern, adding that “unemployment is now becoming a national security crisis.”
New tax measures
Dr Forson who is the MP for Ajumako-Enyan-Esiam said the government had introduced 23 different tax measures in the 2023 budget, naming some of them as increase in upper limited of personal income to 35 per cent, introduction of additional withholding tax on gains from realisation of assets and liabilities, reversal of benchmark values, reintroduction of road tolls and an increase in VAT by 2.5 per cent that would put Ghana’s VAT rate at 21 per cent, the worst in Africa.
“You are introducing VAT at a time inflation has gone up from 13 per cent to 44 per cent and by the end of year we will be moving into hyperinflation season, yet you think the best way to get out of this economic mess is to tax,” he stated.
Challenging the Finance Minister’s attempt to put the blame of the country’s economic challenges on revenue mobilisation, Mr Jinapor said the prices of gold, cocoa and crude oil had increased yet the Finance Minister missed his revenue target by GH¢2 billion.
With Mr Ofori-Atta even anticipating that at the end of this year his revenue target would be exceeded, he asked, “if your revenue target is exceeded and your expenditure is held in check how come your economy is deteriorating?”
“You claim to be meeting the targets and yet your inflation, exchange rate and all indicators are in the negative,” he stated, blaming the government for spending more than it earned.
In a reaction, Mrs Osei-Asare, who is also the MP for Atiwa East, said the government had set the target to raise about GH¢143 billion in revenue, spend GH¢190 billion in expenditure, do an overall real GDP growth of 2.8 per cent and end inflation at the end of the year in the region 18.9 per cent, with gross international reserves covering not less than 3.3 months of imports.
She expressed worry that the tax revenue to GDP ratio was 11 per cent which was way below that of 18 per cent of peer countries.
“So, clearly we need to raise more revenue to help us push the development agenda, stabilise the economy and make things better for our citizenry,” she said.
Mrs Osei-Asare said the government was seeking to increase VAT by 2.5 per cent and not 21 per cent as stated by Dr Forson, the Ranking Member.
“I am therefore urging my colleagues on the other side to support the government to pass the 2.5 per cent increment which we are hoping will raise about GH¢2.7 billion for development for this nation,” he stated.
She said the government was also coming with a measure to reduce E-levy from 1.5 per cent to one per cent, a decision that was arrived at with continuous engagement with stakeholders, including the Minority Leader, who said in December that the E-levy must be reduced to one per cent.
“This measure, Mr Speaker, will give us GH¢2.3 billion and we believe that it will help us do what is expected of us to stabilise the economy and improve on developments in this country,” she said.
Setting the record on road tolls straight, Mrs Osei-Asare said new tolls would only be applied to roads constructed under public-private partnership.
Focusing on the expenditures, Dr Kumah said the government, in the budget, decided to cut down 36 expenditure line items such as compensation, goods and services and discretionary expenditures.
“So, in this budget we are not just seeking to do aggressive revenue measures but we are seeking to aggressively cut down on a number of expenditures,” he said.
“We are going to continue 30 per cent cut in salaries of the President, the Vice-President, ministers, deputy ministers, MMDAs and state-owned enterprises,” he said