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Minister of Finance Seth Terkper has been addressing current criticisms about high taxes, at Stanbic Banks Executive Breakfast Meeting on Tuesday.
More recently, energy sector stakeholders like the Integrated Social Development Centre, the Consumer Protection Agency, and the opposition New Patriotic Party have blamed sharp spikes in electricity prices as a consequence of high taxes imposed on the cost of power. Total amount of taxes on electricity has been pegged at 35% by the ranking member of parliament on the Mines and Energy Committee of Parliament, K.T Hammond.
READ MORE: Here is why you are paying so much for your electricity bills
Responding to the concerns, Minister of Finance Seth Terkper conceded that government has had to resort more to taxes as a source of revenue to block recent revenue generation gaps owing to the country’s recent economic challenges.
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“Ladies and gentlemen, it is important to situate this in the context of using taxes as a means of correction as part of macro economic policy and as part of fiscal policy. I know it has been made to look simple that you can do a correction [Resuscitating an economy] without falling on taxes”, he said.
As a background to his point, Seth Terkper gave a brief summary of the current challenges of the Ghanaian economy and why an intensified tax regime is necessary to correcting those challenges.
“It all started from the implementation of the Single Spine Pay Policy which led to huge ballooning of the wage bill. In fact, we just paid the final GHC3 billion of the salary arrears. At the same time, oil production dropped from 90,000 to 70,000 barrels and, more recently, huge drops in all three commodity prices.”
Mr. Terkper maintains that no country in history has successfully manoeuvred through such economic challenges without increasing taxes.
“Our experience in structural adjustment programs, and our own use of the home grown policy, before the situation affected our reserves, leading us to go for the IMF bailout program suggest that no country can do a turn around without falling on taxes. I challenge anyone to look at Spain, Ireland, and other countries who have done a turnaround and look at the instruments they used and see whether they did not use tax instruments”, he added.