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Mensah Thompson Of ASEPA Addresses Gabby Otchere Darko Ahead of Today’s Mid Year Budget Review

 Dear Gabby, I send you greetings from ASEPA, usually I would have directed this open letter  to Ken Ofori Attah(your cousin, the Finance Minister) considering tomorrow’s highly anticipated mid year budget review. But as the de facto Prime Minister, you have an interesting way of dragging attention to yourself and relieving your cousin and uncle off the pressure from suffering Ghanaians and considering your tweets on social media in the last few days ahead of this mid year budget review, you have rightly earned yourself this response, Congratulations!!! First of all Gabby, I think your understanding of economic management is quite not insightful  and I have followed your analysis for while, and I noticed that you have been by far one of the greatest proponent of extreme capitalism even though you know little about economic management.( I will address that in another forum) One thing that your very shallow economic understanding has probably not been able to figure out is perhaps the interconnectedness of  economic policies (especially macro economic policies) You have also not  acknowledged how bad your uncle’s government has failed as far as revenue generation is concerned.There have been absolutely zero innovation as far fiscal policies are concerned except to keep piling more and more taxes on innocent Ghanaians.(the few ones in the basket)So Ghanaians are now paying more taxes because or your inefficiencies in revenue generation, we are also paying for your incompetence and lack of foresight! Mind you, the tax basket has also not expanded overtime, but the tax value keeps rising, as we have seen the introduction of several new taxes since 2017.But your rather “competent” Cousin do not know that according to significant studies, there exist an inverse relationship between tax values and aggregate tax revenue.What this means is that the more you increase taxes, the more likely people are to default and the lesser your aggregate revenue accumulated. So if you noticed, in 2018 after the sharp increment in some tax components, GRA missed their revenue targets in the first quarter(first four months after the budget), same repeated in the second and third quarter.This year, after the first quarter GRA’s revenue margin dropped and they had to adjust their revenue projections for the second quarter. So common sense should tell you that any slightest increase in taxes, would lead to a further decline in government revenue. So your proposition of tax increment is not based on any proper assessment of the performance of the economy, except perhaps to foster an extremist capitalist agenda that will further push more and more people down the poverty line without necessarily having any positive impact on the overall outlook of the economy.  *Recommendations*If your Uncle so much needs money to fufil campaign promises and to pursue some rigorous election winning projects next year, here are a few tips that may help. 1.Pursue more expansionary fiscal Policies and less contractionary fiscal Policies. Sorry let me break it down for you Gabby, tell your cousin to pursue fiscal policies that opens up the fiscal space and can rope more people into the tax basket.These policies would open up the economy, and as revenue levels rises, government revenue will also increase through accompanying tax returns.  Create Jobs, more jobs!I have always maintained that, there is a positive relationship between employment and tax revenue.The more people employed in an economy, the more government’s revenue.So the over 900,000 graduates from the various Universities, Colleges of Nursing, Colleges of Education and etc who are at home unemployed, do not pay taxes(income taxes).So indirectly government is loosing revenue with the continuous stay of these poeple at home.So brotherman Gabby, tell your Cousin to cut the leakages, create the fiscal space to employ these graduates and he will reap back millions of Ghana cedis in income tax every month from them.(simple isn’t it?)If government cannot employ all of them, then it can provide tax incentives to the companies that will employ the backlog, they will be productive in the economy and government will recoup the revenue losses due to the tax cuts(to the companies) from the  income taxes of the employees, period! 2. Cut down the administrative expenditures of GRA.The 40% benchmark  revenue retention for GRA is ridiculously high.We cannot be spending so much on such inefficiencies. Reduce the revenue retention rate to about 20% and peg it’s rise to their mobilsation performance.Retool the GRA, and expand the human resource capacity to make them more efficient.  Build a robust mechanism to capture the informal sector into the tax basket.(This may include a reliable database that captures data on the informal sector players only)Cut down nuisance taxes and align the revenue losses strategically to very luxury items to reduce the burden on the poor. 3. Seal the leakages.Cut down on ridiculous expenditures like the luxury trips of the President on a rented jet, cut down the allocations to the office of government machinery(OGM)Cut down on the number of Ministers, cut down on the foreign trips of government appointees.Cut down on the administrative expenses of the MMDA’s. And finally you and Asante Bediatuo must cut down on your $12,000 fancy suits and put the money in good use, probably create some jobs that can employ some graduates and maybe government can earn some extra revenue on their income taxes. You may also want to cut down your insatiable  appetite for exotic goods  including handkerchiefs and a dollar-paying GIS for your kids which also further put pressure on our ailing currency.  May this open letter find you well and may the “common sense” reflect in your cousins presentation to the house tomorrow and we will all gather after the midyear budget review and atleast we shall give you credit for all the  “economic sensitivity” if it so happens Prime Minster Gabby! Mensah Thompson Executive Director ASEPA 0542120628 Cc.Ken Ofori Attah Nana Asante BediatuoSource /Ayisah Foster 

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