2022 budget is to please investors, rating agencies – Prof Bokpin
Economist and Finance lecturer at the University of Ghana Business School (UGBS), Professor Godfred Bokpin, has said the 2022 budget is aimed at pleasing foreign investors and credit rating agencies rather than businesses in the country.
According to Prof. Bokpin, tax reforms in the 2022 budget are fueled by concerns from foreign investors and the need for government to avoid a downgrading as well as mitigate the spread on its foreign bonds.
“Concerns from global investors are fueling a lot of the reforms in the budget, so its kind of we [government] have to inconvenience ourselves to look good and not be punished so severely in terms of downgrading and also the spreads [yields on the bonds], so we have to do some quick fixes since revenue shortfalls in the face of rising expenditure has been the reason over the years. So government has to respond in the manner it is doing now,” he remarked.
Prof Bokpin made the assertion during the First National Bank’s virtual Economic Briefing and Post Budget Discussion on the 2022 Budget Statement.
Prof Bokpin speaking further during the webinar, noted the 2022 budget is an austerity budget and heavily fiscal consolidated and hence will not promote business growth and job creation as promised by government.
“It is inconsistent and contradictory to talk about business growth and job creation with an austerity budget such as this.
“The budget is heavily fiscal consolidated and cannot deliver on the job creation and business growth it promises, because government in this budget is looking at increasing revenues by more than 40 percent and that’s huge with regards to the incidence of taxes on businesses,” he noted.
Specifically touching on the E-Levy, Prof Bokpin described the new levy as retrogressive asserting that government in the implementation of the levy will be taxing the capital of businesses thereby affecting the ability of businesses to save for expansion.
“The E-Levy is retrogressive and its implementation will mean taxing the capital of businesses and their ability to save, government instead of using this retrogressive approach should rather adopt an efficient approach in fixing the loopholes that exits in its major tax handles, because government loses as much as it collects from its major tax handles.
“There is a better and more sustainable way of government going about its revenue challenges because I believe that government does not need to kill businesses and undo its financial inclusion agenda for a quick fix.
“So as soon as possible government needs to review the E-Levy,” he stated.
