Professor Joe Nellis, an economist and Deputy Dean of the School of Management, Cranfield University in the United Kingdom (UK), has proffered some recovery strategies for the Ghanaian economy post-Covid-19.
Speaking in a virtual public lecture on the topic Prospects for the Global Economy in the Aftermath of the Covid-19 Crisis, monitored by norvanreports, Professor Nellis noted that Ghana, as a way of quickening its recovery from the pandemic will have to consider opening up for more foreign investments and widening its tax system.
According to Professor Nellis, the single most important recovery strategy for the Ghanaian economy will have to be a reliance on foreign investment during this Covid-19 era.
He posited that Ghana would have to be more open to foreign investment than it has been in the past to recover speedily from the pandemic, noting that foreign investment is the engine of growth.
“My main strategy for economic recovery especially in Ghana and other developing countries will have to be to rely on foreign investment and I wish it didn’t because I can be very critical about inward investment from overseas, but looking at what has to be done and given the investment required, I think there is the need to open up even more to inward investment, because investment is the engine of growth,” he stated.
“And so this means Ghana would have to stimulate investment by offering some other incentives like tax reliefs on capital expenditure, free zones, free ports among others, I mean there are so many ways of doing that,” he said.
Speaking further, Professor Nellis also suggested that a wider tax system will be fundamental in earning government more revenue which it can spend in the economy to speed its recovery.
“We all know that for every government it’s income to help the economy grow is to have a wide based tax system, so tax collection and the breadth of the tax system is fundamental, it’s true in every country especially in Ghana and other developing countries that have a narrow tax system. So I think government’s should look at which taxes can be raised without damaging economic recovery,” he stated
The easiest way to raise tax revenues Professor Nellis further pointed out in the lecture, is to freeze or put a hold on tax thresholds. Tax thresholds is the lower limit of earnings at which tax needs to start being paid, hence any income below the lower limit will not attract taxes.
“The easiest way to raise tax revenues is to freeze tax thresholds, this increases fiscal space and as the income of people increase, they should be pulled into the tax net, that’s the easiest way to do it and I suspect many government’s will do this and possibly in Ghana,” he stated.
“Also corporate taxes I believe is going to increase around the world because there are companies that have survived and are still trading and they serve as few sources of tax revenue for government and so I think the Ghanaian governments should take advantage of that and increase corporate taxes,” he added.
On his outlook for the global economy, Professor Nellis, stated that there would be a strong positive global economic growth occasioned by the vaccine rollout and more fiscal stimulus packages by governments especially in major economies.
International trade he also mentioned, will grow by 8 per cent this year. The USA, Japan and other advanced economies he pointed out will return to end-2019 economic activity levels by the second quarter of 2021, for the UK and the EU region, that would be in 2022 or possibly 2023.
