Economist Advises Caution on Tax Removal to Protect National Revenue
Dr. Priscilla Twumasi Baffour, a respected economist, has advised the government to reconsider its approach to eliminating taxes, emphasizing the potential risks of revenue shortages. Speaking on Joy News' PM Express Business Edition on February 13, she acknowledged that tax cuts might be appealing for political reasons but stressed that economic stability should take priority. She urged the government, particularly the finance minister, to be transparent with citizens if fulfilling tax removal promises is no longer feasible. Dr. Baffour explained that while Ghanaians still support the administration, removing multiple taxes without a proper plan could have severe financial consequences. She warned that if revenue inflows decline sharply, the nation could experience increased economic instability, which would negatively affect businesses and individuals alike.
Expanding on her concerns, Dr. Baffour highlighted how an unstable economy could significantly impact people's living standards, especially those with fixed incomes who already struggle with inflation and the rising cost of essential goods. She noted that although keeping some taxes may come at a political cost, the government must focus on long-term economic stability rather than short-term political gains. She referenced previous policies, particularly the removal of "nuisance taxes," which were intended to shift the country's focus from taxation to production. However, she pointed out that economic growth in Ghana is a gradual process, and the anticipated benefits from tax removal may not immediately compensate for lost government revenue. Without a well-structured strategy to replace this income, the government may struggle to finance critical public services, leading to deeper economic difficulties.
As Ghana works toward economic recovery amidst ongoing challenges such as high debt levels and inflation, Dr. Baffour’s warning serves as a reminder that tax policies should be approached with caution. While reducing taxes can temporarily ease financial burdens for businesses and individuals, she emphasized the need for careful planning to ensure sustainable revenue generation. Policymakers must strike a balance between fulfilling campaign promises and maintaining economic stability, ensuring that any tax reductions are implemented without jeopardizing national finances. Her remarks highlight the broader debate on responsible fiscal management and the importance of long-term economic planning over short-term political expediency. As the government faces mounting pressure to provide tax relief while sustaining public revenue, it must carefully navigate its policies to prevent unintended economic setbacks.
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