Home » Government’s Tax Increases are State-Sponsored Robbery – Prof. Bokpin

Government’s Tax Increases are State-Sponsored Robbery – Prof. Bokpin

by Ikeoluwa Juliana Ogungbangbe

Renowned economist and Professor of Finance, Prof. Godfred A. Bokpin, has strongly criticized the government’s frequent imposition of taxes, describing it as a “lazy approach” to revenue generation that leaves citizens financially oppressed.

Speaking during an appearance on JoyNews’ Newsfile, Professor Bokpin argued that while no one disputes the need for generating more revenue to support the economy, Ghanaians are feeling the strain of unpredictable tax increases.

He remarked, “This is state-sponsored robbery. This is robbery that leaves the citizens financially repressed. It should not be accepted. I think in Ghana, we have allowed too many wrongs in this country.”

Professor Bokpin emphasized the importance of exploring more effective ways to raise revenue without compromising the ability of households to meet their basic needs and the private sector’s capacity to remain competitive.

He questioned the prevailing notion that the only solution to revenue generation is to impose additional taxes. According to him, the constant introduction of new taxes has not significantly increased the tax revenue-to-GDP ratio, particularly in a small open economy like Ghana.

Highlighting the complexity of the tax landscape in Ghana, Professor Bokpin stated, “We have more than 27 different tax handles. That is not the only thing. Since 2020, the taxes we have imposed have incurred significant compliance costs for taxpayers. Constantly reconfiguring systems every six months creates a lack of predictability.”

The economist argued that the government should focus on generating revenue to benefit the very people and businesses it aims to support in building the economy.

“Are we not building it (economy) for Ghanaians? Are we not building it for Ghanaian private-sector businesses? What happens if, by the time we achieve macroeconomic stability, half of Ghanaians have fallen into poverty with no means of reversing it? What kind of economy is that? At its core, it’s about people and businesses.”

Professor Bokpin pointed out that various sectors, including the banking and manufacturing industries, face significant disruptions and expenses due to frequent tax-related adjustments. He emphasized the need for a more thoughtful and sustainable approach to taxation.

“In my considered view, what Ghana is doing is not taxation,” he added.

In January 2024, the government instructed the Ghana Revenue Authority (GRA) to collaborate with two power distribution companies to apply Value Added Tax (VAT) to consumers who exceeded their lifeline power consumption. Finance Minister Ken Ofori-Atta’s directive, effective January 1, 2024, affected the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO).

On January 19, Dr. Yaw Baah, Secretary-General of the Trades Union Congress (TUC), expressed strong opposition to the imposition of a 15% Value Added Tax on lifeline electricity consumers, considering it detrimental to workers’ welfare. He expressed concern about the government’s decision to burden struggling workers with additional taxes.

“This country called Ghana, and all the resources we have, now the government doesn’t see anywhere else to tax; they are taxing our electricity also. Tomorrow they will tax our water, and we are not going to sit down for that to continue. That’s why I’m saying you are going to have a baptism of fire; we need to fight it until this thing is cancelled,” Dr. Baah declared.

Professor Bokpin’s critique adds to the ongoing debate surrounding government tax policies in Ghana, highlighting the urgent need for a comprehensive examination of sustainable revenue sources to alleviate the financial burden on citizens and promote economic growth.

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