Avoinding Greece style fall - Increase Tax on Akpeteshie

Imagine the government slashing the meagre salaries of police officers or teachers by twenty percent? Imagine the introduction of a three year pay and pension freeze and VAT (SALES TAX) increase as seen in Greece?

A situation like that would not only bring about strife, no, it would impoverish Ghanaians and most likely bring down the government. It would force Ghanaians into abject poverty, and God save us all ( the only scenario a coup may be justified and welcomed by Ghanaians). It would simply be a nightmare if Ghana went the way of Greece.

The Vice President, John Mahama, has warned of dire consequences for the country and predicted a collapse of the Ghanaian economy - Greece style - if the debt of the country is not dealt with citing the oversize spending attitude of the previous government as the main reason for the threat to the economy.

So what do we do? Kwabena Duffour, the Finance Minister said "we had to turn to the IMF/World Bank for support due to the huge resource gap in government finances and the balance of payment weakness". And true to his word he took us to the IMF who gave us a three year $600million loan last year.

But this has not solved the problem - that is why Kwabena Dufour increased tax on "Akpeteshie", (local alcoholic drink) which is the source of comfort for many Ghanaians whose lives have been battered by hardship. He didn't stop there; the minister increased taxes on some products and services which generated widespread consternation amongst the working class and even ardent supporters or the NDC government.

Raising further taxes now may be politically unpopular (the opposition New Patriotic Party have already ridiculed the tax hikes and questioned the government about their mantra of "building a better Ghana") but very prudent if we want to avoid the situation in Greece where the country is bankrupt and currently scheduled to receive $146.2 bn worth of aid spread over three years from the European Union and International Monetary Fund, IMF in return for stringent economic measures to pay off Greece's debt which now stands at $400bn.

? When the NPP faced a similar problem of servicing our debt and reducing the deficit, they threw their arms in despair. The NPP declared the country as broke and incapable of surviving without debt cancellation. The Vice Presidential candidate of the NPP in the last election, Mahamadu Bawumia, then Head of Research at the Bank of Ghana said "the reason for Ghana to adopt to the Heavily Indebted Poor Country initiative was because the debt burden was having serious repercussions on economic growth".

The NPP argued that government then, "can do very little in terms of poverty reduction and economic development with the country's debt burden" of GH260million. And so they signed up to the IMF's HIPC initiative.

The truth is that debt servicing absorbs a greater portion of our export earnings and domestic revenue in general. It is a contractual agreement we must abide by. What debt servicing does is to cripple government into reducing the money available for front-line services like health and education.

So John Mahama was spot on when he cautioned about difficulties his government is facing. The NPP knows this; Nana Addo and Alan and the entire bunch who supported Kufour's wrong headed policies of overspending know this. They declared our country a hopeless nation incapable of meeting the basic needs and demands of its people and signed up to HIPC.They are just playing populist politics.

By the time they left office, they had piled up fiscal debt of GH 260 million cedis and unpaid bills amounting to GH 1.7b cedis. Don't ask me how come we owe so much in such a short time? Well, here's how we got into so much debt In spite of the debt forgiveness through the HIPC - the NPP borrowed heavily and embarked on unbridled spending plus the erratic price of crude on the international market. Ghana, like Greece had been living dangerously beyond its means. ? With the kind of economy President Mills inherited, cuts were inevitable. They had to employ fiscal discipline - Capital spending was cut, departmental spending cut, every sector is affected by cuts . The president had to even cut the pleasure trips that was the hallmark of the Kufour years.

The problem of the government is that it was not bold to warn Ghanaians about belt tightening measures. They didn't have the courage to tell Ghanaians there would be restraint in spending even in critical areas, even if they had said so, it may have been couched inappropriately.

We had HIPC to turn to under the NPP. Now we are not eligible for HIPC, there is no bail out plan. We are not the Europeans who have coughed up $562billion plus $319 billion from the IMF for Euro-zone countries like Portugal, Spain Ireland, maybe Britain and any EU economy which may collapse from from huge fiscal deficit.

No we are not. We are "poor" and we are the reckless spending, tea drinking, palace building, merry making and misplaced government priority country. It is time to be candid with the people of Ghana; to take the tough choices and ask for the support of the people of Ghana.

The struggle to build a better Ghana is a difficult one. Our economy is in dire straits. The proper thing to do in the interest of the nation and in the interest of the NDC is to carefully explain to Ghanaians the difficulties we are facing and request for their support in some the belt tightening measures needed to reduce poverty and fund front-line services.

Tax on alcoholic products and cigarettes must go up again. Tax on some imported products must go up to encourage production of local products and the government must help the private sector by reducing corporate tax further and increase taxes for workers who earn more than $18,000 annually. The private sector must be seen as partners in solving the crisis. Tax breaks would put them in a position to expand and absorb the many job seekers government can't employ.

The crisis requires government to talk straight to the people of Ghana. Government needs to be able to communicate to them in a way they would understand and support. The inability to communicate this to Ghanaians is an unacceptable deficiency. When people are supportive, things are easier, when people are not supportive things are much harder. We have a great party and Ghanaians would support us if government is able to communicate effectively. The NDC government needs to do everything to attract support to its efforts.

The adage that "a lie can be half way round the world before the truth has its boots on" is very much so. The longer it takes for this government to engage experts in and outside the party to help them communicate, the more we can be certain that the the NPP will fill the air with lies and deceitt.

The struggle for change is a difficult one and we must all roll up our sleeves and be a part of the change, but some may not be part of it when government appointees go about ripping to shreds people with alternative views and Ghanaians certainly would support it if they don't have ideas what is going on.

Ras Mubarak [email protected]

RAS MUBARAK