The paradox of the liquid basket

: fetching liquidity with a basket



In putting my thoughts together, I join with the many other Ghanaians who have expressed worrying sentiments on the loopholes in the government tax-basket; who believe government should tackle financial leakages and irregularities than always seek to introduce new taxes.



Since our return to democracy, Ghanaians have resolved to hit the middle-income economy status within the shortest possible time. Ghana’s economic resolution to become a middle income economy has been expressly highlighted in the various development programs like the Vision 2020, The Ghana Poverty Reduction Strategy (GPRS I & II), the Ghana Shared Growth and Development Agenda (GSGDA) etc . This growth agenda which is targeted at improving the social and economic life of the people has also been pursued alongside the chase of the ambitious Millennium Development Goals which seeks to amongst other things; eradicate extreme poverty, maternal and child morbidity together with women empowerment etc. Whilst some may argue that our economic and political actors have committed themselves to attaining these goals with official data already showing that we are in the lower-middle income status, none can deny that the lifeblood of every economy; money or liquidity as I choose to call it for the purpose of this article, has always been fetched with a cane-basket, craftily woven by the system with large loopholes and escape joints.

These loopholes exist mainly in the public, civil and local government services as has most always been indicated by the annual reports of the Auditor-General. These loopholes on the sides of the basket exist in the form of tax and cash irregularities, outstanding loans etc. These irregularities have often been perpetrated through unauthorized expenditure, misappropriation and misapplication of revenue and largely, imprests that go unaccounted for and non-compliance with laid-down contractual and procurement processes. Payroll irregularities and outstanding loans, the least said about them the better.

The Local Government Revenue Collection System also remains one of the well-woven baskets with larger loopholes, particularly when it is the agency that executes government’s growth and development agenda on the grounds. Private companies are often contracted to collect revenue from the market folk on a daily basis for the MMDAs, for commission as rewards. This leaves the levy collections at the mercy of the conscience of the collector who decides how much to collect and how much to account for. This has often led to loss of huge sums that should have accrued to the assemblies. Assemblies without robust commercial activities therefore always have to rely on the District Assemblies Common Fund whose management and application we reserve for another day.

This clearly shows that financial administration and management in the public, civil and local government services has not been encouraging despite the number of reform programs that have been pursued like the commendable Composite Budgeting being used by the MMDAs.

I believe moving forward, emphasis should be shifted to the perfection of the tools that are used to fetch liquidity from the public than expanding the number of taxes. There is more revenue we can recoup than the ones that can be generated through new taxes.

That said, it is also worth noting that Ghana’s departure from a lower income economy to a lower-middle income status means that donor support will not continue to flow like it used to. It has therefore become imperative that we institute measures aimed at tightening the loose ends of the tax-collection basket. MMDAs should enhance their database capturing system of commercial activities, to enable a more accurate forecast of revenues so as to help monitor the collectors of Assembly revenues. Until these and many more effective measures are adopted, the government will continue to fetch liquidity with a basket whose holes shall continue to widen. In my opinion, the length of the path towards self-reliance as a nation will depend on how best we can collect taxes and not how crafty we can introduce new taxes.



The writer AHMED SALIM NUHU is a student of Economics, KNUST and a the current President of the College of Art and Social Sciences Students’ Council.