Eye of the Storm: $350m tax waiver; how prudent?

December 23, 2024

Taxes Word on Wood Block on Top of Coins Stack

The Majority Leader, Alexander Afenyo Markin has been on record as saying that the NDC Government would struggle to attain some of its campaign promises because of the taxes it is proposing to scrap; these include the E-Levy, Covid Levy, Betting Tax. Ironically, the same Majority leader, very much aware of the challenges the NDC government would face, is demanding more cuts in tax revenues through the controversial tax waivers.

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For the first time in the history of the Fourth Republic, the country may be entering a new year without a spending budget. Parliament has been drawn in a bitter feud with the Majority NPP and Minority NDC at loggerheads in running battles that commenced with the Vacant Seats controversy.

Now with the NPP suffering a comprehensive defeat in the presidential and parliamentary elections, the acrimony seems to have deepened, particularly, so, with the exacerbation caused by the contested seats in the parliamentary election.

The NPP, sweating under the massive loss and faced with the realization that they are bound to be the Minority in the next Parliament, is seeking to push through some Bills and controversial tax waivers for some companies. But even as Majority, they lack the numbers and their trump card has been to make any budget reading contingent on the granting of the tax waivers to the companies.

Is it not striking that a country that has suffered very difficult economic challenges; has struggled to pay both local and foreign contractors; is riddled with so much debt; and a country that has even struggled to pay WAEC it debts leading to the withholding of SHS scores in the WASSCE, would seek to walk this path.

Many have wondered why the government is so bent on these waivers; why should a political party leaving power seek to burden the incoming government with tax waivers that may not be in the interest of the country?

The NDC has insisted that it would not accede to the request of the NPP, and justifiably so; it is clearly out of order for the outgoing government to take a decision with such significant economic ramifications for the country’s economic direction. It is indeed baffling. Clearly, something is amiss here.

The incoming Mahama-led government faces a very arduous task with regards to economy. While the Finance Minister has been touting recent gains made in terms of economic growth, and even bragged that the NPP was handing over to the NDC, a strong economy, that is simply not the case. Our economy despite the gains in recent times is still fragile and would require strong, creative and steady hands and minds to manage it out of the woods. That is the reason why the $350m tax waiver raises very critical questions.

The Majority Leader, Alexander Afenyo Markin has been on record as saying that the NDC Government would struggle to attain its campaign promises because of the taxes it is proposing to scrap; these include the E-Levy, Covid Levy, Betting Tax. Ironically, the same Majority leader, very much aware of the challenges the NDC government would face, is demanding more cuts in tax revenues through the controversial tax waivers.

While it is important to acknowledge the importance of tax waivers to corporate organisations, particularly, in challenging economic times, any such waivers should be measured against the country’s economic and development interests.

Definitely, the incoming NDC government should also place these tax waivers in proper perspective, and not be overly dismissive of them without critically analyzing their potential impacts. Are the beneficial companies in dire straits for which they may require some respite to help them thrive? What are the larger implications of the waivers for industrial growth, employment and foreign exchange?

Certainly, with their new status as the incoming government and their influence even in the current Parliament, it is reasonable to expect the NDC to insist on them making the call on the tax waivers, as ultimately, they would have to deal with the ripple effects of the waivers. And, it is quite disappointing that the NPP fails to appreciate this and would hold the entire nation to ransom, apparently oblivious of the fact that their decision not to read the budget because of the waivers, plunges the dagger deeper in their soul.