A Senior Economist at Institute Economic Affairs has said the governmentï¿½s aim to reduce the budget deficit by 9% is not ambitious enough.
Speaking at Citi FMï¿½s roundtable series to review the 2013 budget, Dr. John Kwakye said ï¿½Of course we had no choice but to reduce the deficit as the 2012 level was unsustainable ; but I am not sure if the proposed reduction from 12% to 9% is ambitious enough. ï¿½
Dr. Kwakye said he was however mindful of the risk of a much larger reduction.
ï¿½I know that the burden of fiscal adjustments falls more in revenues than an expenditure. I am always happy to see revenue goes up but since as a middle income country we should be taxing more; however Ghana spends like a middle income country but taxes like a low income country.ï¿½
Further reviewing the 2013 budget, Dr. Kwakye said he is against ï¿½increases income tax, corporate tax and VAT rates because they are already high. I welcome increases in other rates in the budget.ï¿½
According to the Economist, the 2013 budget did not indicate ways how government plans to broaden the tax base such as roping in more of the informal sector operators.
Dr. Kwakye suggested that government should consider exploiting property tax and reduce the level of tax exemption to help increase our tax base.
He also expressed worries on Ghanaï¿½s current wage bill. ï¿½I see the wage bill go further from from 9.2% to 10.1% of GDP ;the wage bill seems to be escalating out of control and I think there is a need for a national debate about how to control it.ï¿½
He also said he did not see a clear line for capital expenditure in the budget and fears that capital expenditure will be sacrificed for the expediency of recurrent expenditure.
ï¿½I am however always disturbed by the skewed nature of our budget of our budget in favour of recurrent expenditure and against development spending.
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