Tax cuts may be appropriate given the current challenging economic environment, but according to Dr. Patrick Assuming, a development economist at the University of Ghana Business School (UGBS), they are not long-term solutions.
He contends that Ghanaians should expect improved economic management, better accountability, and the wise use of tax payer money rather than tax reductions.
He was alluding to the requests made by the Arise Ghana young protesters, who are calling for a number of things, including the complete elimination or major reduction of petroleum product taxes to lessen some of the present challenges Ghanaians are experiencing.
Dr. Asuming said on JoyNews' PM Express that the government would still have to address the underlying issues plaguing the economy even if it complied with protestor demands and reduced taxes on fuel items.
But we also need to consider more long-term and broadly, he continued. Therefore, if we do it today, fuel costs may increase by about 3 cedis and 50 pesewas. But if we don't solve the basic issues that got us here, we'll make the same mistake today and find ourselves back at 11 cedis in three months.
"So while some tax changes may provide short-term relief, for me the most crucial thing is to look at addressing the weaknesses within the Ghanaian economy that have resulted in a point where the currency is sharply depreciating, and frankly over the last few years the economy is not doing well, and it's not creating enough jobs for the youth," the author says.
He said that tax cuts at this pivotal juncture in Ghana's budgetary history might give the country a catastrophic blow to its economy, aggravating the situation of Ghanaians.
"I think that will be successful if the protesters were making that type of demand or asking the government to be a little more accountable in terms of how public money is utilised, That, in my opinion, will be a better long-lasting answer to the issues we currently face.
"We may decide to reduce taxes, but the other thing is that if we decide to reduce taxes today, you know, the state of government financing is such that its going to lead to a situation where our deficit will widen and our debt will eventually you have to bring back taxes to pay off the debt at some point down the line," he said.
"Therefore, in my opinion, there is every reason to request and demand more accountability, better use of tax payer dollars, as well as better management of the economy and assurance that we are on a sustainable course.