A review of the next chapter: Are Bawumia’s promising solutions workable for the future?

Expectations are often formed whenever a notable member of our society speaks. What makes the speech on Wednesday, February 7, 2024, so significant was the fact that Dr. Mahamudu Bawumia has been a victim of his own difficulties. One of the most involved Vice Presidents of the modern era and a fierce opponent of our former president, His Excellency John Mahama, is Dr. Mahamudu Bawumia.

Prior to the speech, I had some expectations, just like every other Ghanaian. These anticipations included:

1. I was interested to see how the Vice President would muster the courage to stand in front of the audience and, by extension, the entire nation, and give his speech after receiving multiple criticisms directed at both his party and him.
2. Inform Ghanaians of the country’s economic difficulties and the bold steps the administration has made.
3. Name some of his major successes and the areas he oversaw throughout his vice-presidential tenure.
4. Once elected, briefly describe his goals and priorities as president.
5. Give Ghanaian a demonstration of his independence.

Debates concerning the viability of Dr. Mahamudu Bawumia ‘s (NPP flagbearer) suggested vision are still going on. Among the queries are:

1. Did Dr. Mahamudu Bawumia live up to the aspirations of the nation as well as the grassroots faithful?
2. What demonstrates that Dr. Mahamudu Bawumia’s audacious future is feasible, especially with the elimination of taxes?

Did Dr. Mahamudu Bawumia live up to the aspirations of the nation as well as the grassroots faithful?

I was interested to see how Dr. Mahamudu Bawumia would have the strength to stand in front of the auditorium and, by extension, the entire nation, and give his speech after years of the previous administration’s critics’ attacks.

Political observers and the New Patriotic Party (NPP) were initially perplexed and alarmed by President Akufo-Addo’s selection of Dr. Bawumia as his running mate, given that Dr. Bawumia was not a prominent figure in Ghanaian politics at the time. However, President Akufo-Addo remained steadfast in his decision, and the two candidates ran in the 2008 and 2012 elections, falling just short of triumph to the National Democratic Congress (NDC) led by John Evans Atta Mills and John Mahama, respectively.

The Presidential Akufo-Addo-Bawumia ticket achieved triumph in both 2016 and 2020, and they have maintained their positions as President and Vice President, respectively, for nearly eight years. Dr. Mahamudu Bawumia, who until recently was an outspoken critic of the previous administration as both a candidate and Vice President, has also been subjected to considerable criticism.

In fact, many Ghanaians had speculated that his public discourse on economic matters would be prohibitively expensive. Due to this and numerous other pertinent matters, the presentation was significant to the average Ghanaian. During the analysis of his speech, a multitude of factors were considered, including context, substance, rhetorical tactics, and prospective influence.

Contextually, considering Dr. Bawumia’s position as Vice President of Ghana, his discourse mirrors the present condition of the country and the obstacles it confronts. The context comprised economic concerns, governance issues, social welfare, and Ghana’s overarching trajectory of development.

Dr. Mahamudu Bawumia began his address by providing context for the economy that his government inherited. He stated that the economy in 2017 was a difficult one for his administration to inherit, marked by sluggish growth, power disruptions, healthcare, infrastructure, education, and social protection.

Additionally, he stated that a decisive program was instituted by the government to stabilize the economy and address a variety of issues. From 2017 to 2019, positive trends were observed in key economic indicators. The nation encountered substantial economic difficulties spanning from 2020 to 2022 because of the COVID-19 pandemic and additional worldwide occurrences.

The fiscal deficit widened, the level of debt escalated beyond sustainability, and Ghana was confronted with a balance of payments crisis. Despite pessimistic forecasts, Ghana effectively managed the obstacles through its composed leadership and the backing of its citizens. The objective of IMF assistance was to restore fiscal and debt sustainability and stabilize the economy.

Inspiring a sense of collective responsibility for Ghana’s future and outlining a strategy for attaining progress through altruistic leadership and inventive resolutions seem to be the dual objectives of the speech. Dr. Bawumia’s message of selfless leadership revolves around the criticality of leaders placing the nation’s requirements above their own personal interests. The importance of integrity, accountability, and service to the public is emphasized by him.

The speech potentially promotes audacious and progressive strategies in order to tackle the obstacles faced by Ghana. This encompassed a comprehensive paradigm shift, economic reforms, infrastructure development, social programs, and technological advancements. Dr. Bawumia mobilized the nation’s populace and sparked national pride by invoking Ghanaian values including perseverance, innovation, and solidarity.

The program elicited positive audience responses and engagements, which served as indicators of the viewers’ agreement with Dr. Bawumia’s message and their positive outlook on the future of Ghana. However, skepticism or criticism may ensue should the audience discern discrepancies between the rhetoric and the actual situation or cast doubt on the viability of the suggested remedies. The speech has the potential to impact the way the public perceives Dr. Bawumia’s leadership, the agenda of the government, and the trajectory of the nation. The speech demonstrated coherence, consistency with previous actions, and implementability. Ensuring the vision presented was inclusive and in accordance with the varied requirements and aspirations of Ghanaian society were of the utmost importance.

Dr. Mahamudu Bawumia’s address, “Ghana’s Next Chapter: Selfless Leadership and Bold Solutions for the Future,” sparked hope among the populace, spurred action, and charted a path for Ghana’s advancement overall.

What demonstrates that Dr. Mahamudu Bawumia’s audacious future are feasible, especially with the elimination of taxes?

Dr. Mahamudu Bawumia may inquire whether he is responsible for his own misfortunes. Indeed, the answer is affirmative. This is because, in addition to his criticism of the previous administration, Dr. Mahamudu Bawumia has been one of the most active Vice President throughout the years, presiding over numerous government initiative projects. Days following his renowned speech, numerous social media platforms monitored, pointed in one direction.

Certain segments of the public, including members of the opposition, reach the conclusion that certain aspects of the presentation constituted an indictment of the government, of which he is a member. This conclusion vindicates those who have criticized the government and raises grave concerns. Asserting the elimination of certain taxes, such as the Emissions tax, Gaming Tax, E-Levy, and VAT on electricity consumption, while maintaining a government of more than 100 ministers and promising to reduce the number of ministers to no more than 50; this sentiment instills a sense of validation in certain individuals who advocate for government downsizing and the elimination of such burdensome levies. Others have speculated as to whether Dr. Mahamudu Bawumia supporters will pursue him now that he has adopted a position that appeases them regarding nuisance taxes and government size. They have previously claimed that Bawumia supporters pursued them for such criticisms.

With respect to the audacious resolutions for forthcoming critical undertakings that ought to be executed when afforded the opportunity, Dr. Mahamudu Bawumia elaborated on his vision comprising twenty (20) policies organized around seventy (70) pillars. These are education, macroeconomic Stability, tax reforms, jobs creations, communication and digitalization, agriculture, transportation, housing, power sector, minerals, industry, credit system for Ghana, constitutional review, sports, health, creative arts, care for the vulnerable and special needs, local government infrastructure development), gender, and youth. The overarching objective of Dr. Mahamudu Bawumia is to establish an all-encompassing society that harnesses the capabilities of every individual, with the pursuit of food self-sufficiency, prosperity, dignity, and complete engagement in the fourth industrial revolution.

What demonstrates that Dr. Mahamudu Bawumia’s audacious suggestions for the future are feasible, especially with the elimination of taxes, are yet unanswered. Rather than labeling Dr. Mahamudu Bawumia as a compulsive liar, fraudster, or useless person, among other derogatory terms, it seems that this is a crucial subject for which every Ghanaian should seek answers. When taxes like the Emissions tax, Gaming Tax, E-Levy, VAT on electricity consumption are eliminated, how can Dr. Mahamudu Bawumia raise his revenue?

Notably, in excess of 70% of government expenditures are financed via taxation. Once more, while anything is subject to taxation, the government must make the determination regarding which items to tax. Adam Smith posited in his seminal work “The Wealth of Nations” that taxation ought to possess four essential attributes: simplicity, certainty, fairness, and efficacy. Smith categorized taxes into three distinct classifications: taxes on what you buy, taxes on what you own, and taxes on what you earn. Taxes in Ghana are classified into two overarching categories: direct and indirect. When a taxpayer pays a direct tax, they are remitting payment directly to the governing authority. In contrast to the levies on income and profits of taxpayers, which are direct, indirect taxes are imposed on products and services. The services sector is subject to the standard VAT rate of 15%, whereas VAT registered retailers and wholesalers of commodities are exclusively eligible for the flat VAT rate of 4%. An additional day would be devoted to the discussion of how it operates.

The potential consequences for businesses and individual revenue streams of implementing a flat VAT rate are manifold, encompassing both favorable and unfavorable effects. Constraints regarding consumer demand, compliance and simplicity, predictability, and cost pass-through are a few examples. The influence of a uniform value-added tax (VAT) rate on enterprises is contingent upon a multitude of elements, such as the state of the market, industrial attributes, and the wider economic climate. There are numerous justifications for eliminating these taxes and levies. These tariffs are considered to be in opposition to his objectives regarding electronic payment systems. In addition, the anticipated $6.9 billion from E-levy has not materialized. The objective of transitioning the economy from a tax-based to a production-based system could be achieved through the reduction of tax burdens on businesses.

According to IMF program data, the government anticipated generating approximately GHS 9.5 billion in revenue through the implementation of the program’s 12 revenue measures. Whiles revise and expand taxes on gambling revenues and the entities subject to communication service tax in order to generate GHS 512.4 million and GHS 512.4 million, respectively, in terms of direct taxes. The objective of the simplified mechanism for the modified taxation scheme for minor taxpayers is to generate GHS 427 million. In the realm of indirect taxes, the elimination of specific VAT exemptions and the implementation of a 5% VAT on commercial property rentals are anticipated to yield GHS 4.4 billion and GHS 854 million, respectively. The introduction of a commissioner-general authorized VAT invoice for income tax reforms, an emissions tax, and a plastic and packaging tax are projected to contribute GHS 512.4 million and GHS 597.8 million, respectively.

Every well-mwaning Ghanaian ought to inquire whether this vision is attainable and how Dr. Mahamudu Bawumia intends to address the revenue shortfall subsequent to the elimination of these taxes via the implemented tax reforms. Let us bear in mind the elimination of the subsequent taxes: The revision and expansion of taxes on GHS 512.4 million in gambling revenues, GHS 4.48 billion in selected VAT exemptions, and GHS 597.8 million in introduction of an emissions tax and a plastic and packaging tax combined for a total of GHS 5.51 billion. Technically, the complete abolition of these taxes by Dr. Mahamudu Bawumia will result in the loss of GHS 5.51 billion.

The primary contention raised in opposition to the reforms revolves around their adverse effects on government revenue and, consequently, economic expansion. Incorporating the ongoing discussions concerning the viability of the tax reforms advocated by NPP candidate and flagbearer Dr. Mahamudu Bawumia, I contend that the following evaluation criteria is applied to his proposals.

The success of these tax reforms is propelled by the NPP candidate’s objective of expanding the tax base and promoting greater collaborations with the private sector in the development of essential infrastructure (e.g., roads, hospitals, and schools). Such measures would not only augment government revenue but also alleviate the government’s financial strain and stimulate economic expansion. Potential justifications for the tax reforms that Dr. Bawumia has put forth include the following: Initially, akin to the approaches taken in developed nations such as the United States and China, increasing the use of public-private partnerships (PPPs) can substantially alleviate the fiscal strain on the government regarding infrastructure development, thereby freeing up funds for resource reallocation.

It has the potential to reduce reliance on contentious levies, including emissions taxes and wagering taxes, among others. This methodology not only promotes progress but also guarantees financial viability. By utilizing a PPP arrangement, the preliminary construction costs could be financed by the private sector, thereby substantially alleviating the government’s immediate fiscal burden. Conversely, the revenue generation potential of these Public-Private Partnerships (PPPs) agreements is contingent upon the government’s investment in the agreements.

Expanding and streamlining the tax base continues to be a viable alternative strategy for addressing the shortfalls in revenue. Ghana Revenue Authority data indicates that around 13 percent of GDP is not subject to taxation. Studies have shown that flat rate and a digitized tax registration process could result into the GRA increasing total revenue by at least 2% of GDP against a 0.29% of GDP in revenue projected losses when these three (3) taxes are eliminated. Furthermore, the employment rate and economic diversification are cited as justifications for the tax reforms that Dr. Bawumia suggests.

The majority of individuals in developed nations are employed by the private sector. By promoting private sector investment and active participation in various economic activities, Ghana has the potential to bolster its economic resilience, decrease dependence on volatile sectors, and stimulate employment generation. Diversification is a critical factor in ensuring long-term economic stability and expansion. Dr. Bawumia should not be subjected to name-calling and insults; this should not be the course of action. The infusion of GHS 5.51 billion into the revenue stream could significantly influence the discourse surrounding the nation’s future.

Finally, in order to assess the feasibility of the audacious solutions proposed by Dr. Mahamudu Bawumia for the future, it is further imperative to examine specific parameters. As a means of assessing the feasibility of these aspirations, the West African convergence criteria is assesessd. The West African convergence criteria, alternatively referred to as the Macroeconomic Convergence Criteria, were devised by the West African Economic and Monetary Union (WAEMU) in an effort to foster economic integration among member states and establish a common currency, the West African CFA franc (XOF). These criteria are comparable to those established by the European Union for euro-adopting nations. The following summary presents the convergence criteria for West Africa, along with Ghana’s ranking in relation to these criteria.

Table 1. West Africa convergence criteria type

Convergence criteria type	Global Threshold	Ghana
Budget Deficit	The budget deficit, excluding grants, should not exceed 3% of the Gross Domestic Product (GDP).	11.8%(2022)
Inflation Rate	The inflation rate should be less than or equal to 3%.	23% (2023)
Central Bank Financing of the Budget	The financing of the budget deficit by the central bank should not exceed 10% of the previous year’s tax revenue.	4.2% (2023)
Public Debt External Debt	The public debt should not exceed 70% of GDP.	66.4%(2023)
Exchange Rate Stability	The exchange rate of the national currency against the euro should not fluctuate by more than plus or minus 10% over a period of two years	10.75%.

It is considered critical for the economic stability of member nations and for fostering an environment that is conducive to the successful implementation of a common currency that these convergence criteria are met. It is essential to note, however, that not all member countries had completely complied with these criteria as of my most recent update, and that the schedule for the common currency’s implementation has been subject to revisions and delays. According to Table 1, Ghana had achieved approximately 50% of the thresholds by 2023, despite numerous attempts on other indicators as well.

In brief, the successful implementation of Dr. Mahamudu Bawumia’s audacious resolution for the nation hinges on the resolution of two pivotal cases. Commencing with the elimination of Emissions tax, Gaming Tax, E-Levy, VAT on electricity consumption, as well as the enhancement of private sector engagement, audacious tax reform decisions provide a means to foster economic growth, innovation, and efficiency. In conclusion, Ghana’s capacity to fulfill the West Africa convergence criteria, the favorable trends noted in critical economic indicators, the effective utilization of the potential of the digital economy, and the guarantee of sustainable, inclusive development in Ghana are all noteworthy aspects. probable indication that it is POSSIBLE

Prof.  Boadi is the Dean, Faculty of Accounting and Finance)

University of Professional Studies, Accra

The post A review of the next chapter: Are Bawumia’s promising solutions workable for the future? appeared first on The Business & Financial Times.

Read Full Story