Government disguising ineffectiveness with strong PR campaign – Adongo

The National Democratic Congress (NDC) Member of Parliament (MP) for Bolgatanga Central, Mr Isaac Adongo, has taken a swipe at the economic management credentials of the governing New Patriotic Party (NPP). He described the Party’s economic policies as inferior to the ones used by the opposition NDC prior to its exit in January this year.

While the NDC adopted bold, tough and long term-minded decisions, Mr Adongo said the NPP had opted for "quick fix solutions" that cannot stand the test of time.
In spite of its weak economic management methods, the NDC MP said the ruling NPP had backed its strategies with a strong public relations (PR) campaign and that had succeeded in disguising the impact on the economy and people in particular.

He, however, said at a public lecture on December 11 that: “Like pregnancy, the realities of the government’s ineffective policies are now dawning on Ghanaians.”
“When it comes to numbers, you cannot hide because it will hit the bottom-line of the business, it will hit the sales volumes because your prices are now high and at the end, the business will suffer,” he stated.

He cited the recent complaints by the Kumasi Owners Business Association (KOBA) against the three per cent value added tax (VAT) flat rate, the inability of the government to raise GH¢6 billion under the energy bond and plans to introduce a withholding tax on VAT as some of the realities now dawning on people.
"So, the NDC has a better and superior record of managing our economy and left much more stable fundamentals even in the face of all the challenges we had with oil," he observed at the lecture organised by pro-NDC group, Coalition for Restoration (CFR).

On the theme: ‘Analysis and expectations of the 2017/18 budgets to drive the change from taxation to production,’ the programme offered speakers the opportunity to assess the government's two budgets in the context of moving the economy from taxation to production.

Mr Ibrahim Mohammed Murtala, who was a co-guest speaker, analysed the government's policies on trade and industry with a conclusion that it had failed to live up to its promises.

The Deputy Ministers of Finance and Information, Messrs Kweku Kwarteng and Kojo Oppong Nkrumah, respectively, did not respond to requests for comments.

Sustainable policies

Making a comparison of the economic management credentials of the two main parties, Mr Adongo said NDC members needed to feel proud because they “belong to a political party that takes time to provide sustainable growth”.

“We do not believe in quick fixes that only please the electorate,” he emphasised.

While admitting that growth in the first half of the year had been robust, he noted that it was fuelled by strong growth in the extractive sector, which did not affect the lives of the people.

He said while the real sector of the economy, which touches the lives of people, grew by 6.3 per cent in the first quarter of 2016, growth reduced to 3.9 per cent in the same period this year.

“By the second quarter of 2016, we had grown the real sector – the Makola and the rest – to 5.5 per cent. This year, it reduced to four per cent,” he mentioned, adding that the end-year projection of 4.8 per cent was also shy of the five per cent recorded last year.

“So, comparing these, who are better managers of the economy and whose economic management impacts the lives of Ghanaians directly, provides sustainable jobs, protects livelihoods and ensures that the growth is one generated by Ghanaians and not foreign investments?” he asked.

‘Killer taxes’

On taxation, Mr Adongo indicated that contrary to the pronouncement that the economy was being moved from taxation to production, the government had successfully “tweaked” the country’s tax laws “in order to kill us slowly”.

“Now, under the people who are moving from taxation to production, companies will now be collecting withholding taxes on VAT. That means when you are paying VAT for a zero-rated company, they will withhold seven per cent of your money,” he said, explaining that such a policy would reduce the cash flows of businesses by the equivalent of the tax rate.

This requires that such businesses get additional capital from banks at a cost, he added.

“This is killing you slowly. You the business will not know but after you have operated for three to four months, you will realise that your working capital cycle is beginning to suffer and you will have to recapitalise,” he stated.

He argued that “another killer tax” was the decision to ask operators of bonded warehouses to secure letters of credits (LCs) to cover duties on their imports.

Unlike before where the operators were allowed to sell their imports before paying the duty, the MP said the government was now saying that operators get LCs to cover the duties prior to the sale.

“Now, this government is saying that the operators have been smuggling the goods and they are not seeing them. So, I ask the question, who has been opening the Ghana Revenue Authority (GRA) padlock?” he quizzed, explaining it was a requirement for the operator and GRA to put separate padlocks on the warehouses.

“So if I am a responsible business that has been fulfilling my responsibilities under a warehousing scheme, I should now suffer because of the inefficiencies and the corruption of GRA?” he asked. –GB