Wednesday, 8 April 2015

Will The US Dollar As Legal Tender, A Low-Tax Regime And Business-Friendly Economic Policies Not Make Ghana Thrive?

Every four years, since the 4th Republic came into being, whenever an incumbent president has faced re-election, to enable him secure a second term in office, fiscal discipline has been abandoned - and there has been a resort to reckless and unbudgeted-for-spending by his administration.

That profligacy has resulted in huge government deficits that have often placed an unnecessary burden on individuals and families from every strata of Ghanaian society.

We must force Ghanaian politicans to be responsible fiscally and manage the macro-economy prudently - even when they face re-election.

One of the most effective ways we could do so will be to take away the power to print money from the Bank of Ghana. The question then is: how do we achieve that end?

Since most businesspeople in Ghana regard the US dollar as a better store of value than the Ghana cedi, why do we not put aside foolish national pride, and take a leaf from the stressed-economy-policy-handbook of Robert Mugabe's Zimbabwe - and dump the worthless Ghana cedi: and adopt the US dollar (or euro) instead as our currency?

Loss of seigniorage from issuing coinage of the discarded Ghanaian currency can be calculated and a commensurate dollar equivalent negotiated with the US Congress and US Federal Reserve officials, and collected regularly by the Bank of Ghana.

With one stroke of the pen, we would have removed the ability of profligate politicians to destroy the results of people's hard work, and ruin the carefully-laid plans of industrious individuals and well-managed businesses - as inflation resulting from economic mismanagement steadily erodes the value of cash assets, and bouts of uncertaintity caused by the unstoppable decline in the value of our currency, makes a complete nonsense of the yearly budgetary-plans of individuals and businesses.

There is also the question of the overburdening of individuals and businesses with taxes. It is intolerable that Ghanaians are overtaxed merely to enable politicians manipulate the machinery of state for party advantage - and to feather their own nests and that of their cronies. The National Disaster Management Organisation's outrageous overspending is an egregious example.

Why provide them with the wherewithal to continue doing so, I ask?

As we all know, only a relatively few people in Ghana, who work in the formal sector of the national economy, actually pay income tax. It is an unacceptable situation - and unfair for hardworking Ghanaians.

If white-collar criminals will end up siphoning off taxpayers' cash held in the national treasury, anyway, why not abolish personal income tax in Ghana - and make this an attractive location for high net-worth individuals from across the globe, in so doing?

And instead of piling on yet more taxes on already overburdened entrepreneurs, why do we not simply lower taxes on the profits of businesses to just 5 percent - and put Ghana on the world map as the nation with the lowest corporate tax rate in Africa?

Which transnational corporation interested in Africa as a market, would not move its African headquarters here, if that were the case?

And will they not spend money locally hiring staff, renting or purchasing office accommodation, build factories, warehouses and establish new service-sector businesses, etc., etc.? Surely, that will help increase our GDP, and create more jobs for the younger generation, would it not?

And will low taxes on business profits, not encourage tens of thousands of businesses in the informal sector of the Ghanaian economy, to regularly pay their fair share of taxes - leading to a significant widening of the tax net and an increase in tax revenues?

Perhaps the Hon. Kennedy Adjapong of the New Patriotic Party is right to hold the Ivory-tower mentality of our educated urban elites in such contempt - expressed so angrily in his recent "NPP fuo eyebooklong" rant. Alas, our educated urban elites are long on theory - but pretty short on practical common-sense-solutions.

In the main, many Ghanaians seldom do any original and creative thinking - because our diverse cultures and educational system do not encourage curiosity in the young.

What will make Ghana thrive is to remove the ability of our ruling elites to print money - by making the US dollar legal tender: and turning our country into a nation with a low-tax regime and business-friendly economic policies.

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