President Nana Addo Dankwa Akufo-Addo has reminded Ghanaian workers of the expenditure of billions of Ghana cedis and many interventions his government had to make last year alone to secure jobs and incomes in the midst of the ravages of COVID-19 pandemic.
He urged workers to be cautious in their demands in order not to put undue pressure on the national kitty, and how unrealistic it is to suspend all taxes on petroleum products.
For instance, President Akufo-Addo pointed out that in 2021, government spent GH¢31.7 billion on employees’ compensation, wages and salaries, pensions, gratuities and social security.
This amount, he indicated, was paid out of a total tax revenue of GH¢56.5 billion, explaining that payment for 700,000 public sector employees alone absorbed 56 per cent of tax revenues for 2021.
President Akufo-Addo stated these on May Day last Sunday in response to demands by the Secretary General of the Trades Union Congress (TUC), Dr. Yaw Baah on government to remove taxes on petroleum products in order to reduce hardships of Ghanaian workers.
He reminded workers on how rigid the national budget is, calling on labour and employers to support government in addressing the challenges.
President Akufo-Addo added that the fiscal impact is even starker, considering the three largest expenditure items of employees’ compensation, interest payments, and statutory funds which amounted to GH¢81.3 billion representing 144 per cent of tax revenue in 2021.
“This means that the total tax revenue is not enough to meet our commitments on compensation, interest payments, and statutory funds as we have to resort to non-tax revenue and borrowing to be able to meet these obligations,” he stated.
Removal of taxes unsustainable
President Akufo-Addo told the workers that the call for the removal of petroleum taxes is not sustainable.
“On the vexed matter of petroleum price increases, the suggestion has been made which has also been repeated by the Secretary General, is at this moment, not sustainable. Removing taxes on petroleum products will reduce government revenues by some GH¢4 billion. At this time, when we are determined to expand government revenues in order to increase our capacity to finance our own development, can we afford to reduce government revenues by GH¢4 billion?
“It is important to put on record at the outset, that when COVID-19 struck and public sector workers in some countries were either losing their jobs or getting reduced salaries, my government continued to pay the salaries of public sector workers without any reductions, and we ensured that no public sector worker lost his or her job. It cannot therefore be said that my government does not care about the plight of the Ghanaian worker.
“I’ve also acknowledged on several occasions that we are in difficult times, and government has not thrown its hands in despair, and it is not looking for the easy way out. On the contrary, we are working hard to address the current challenges facing the economy and those that relate to improving the quality of life for all Ghanaians.
“I will be the first to admit that conditions of service in the wider public service needs improvement, however, these should be done within budgetary constraints to ensure that we do not put excessive pressure on our public finances,” President Akufo-Addo urged.
Government, he reiterated, is currently confronted by very tight financing conditions, in the wake of inadequate domestic revenue mobilisation.
“Indeed, some of the revenues from these same taxes on petroleum products is what is used to pay some of the salaries of some of the 700,000 public sector workers on government payroll. We are addressing the issue of fuel price increases by implementing measures that are succeeding in stabilising the exchange rate, a key determinant of fuel prices.
“Government is also working hard to ensure reliable supply and availability of petroleum products, thereby preventing shortages, a phenomenon which is being experienced in some other neighbouring countries. By the same token, we are keeping the lights on in Ghana despite all the difficulties our economy is going through.
“We should bear in mind, that even though we are a modest producer of crude oil, with a current output of 148,000 barrels per day, we are still a net importer of petroleum products. We, therefore, continue to be vulnerable to the price volatilities of the world market for petroleum products. Nonetheless, intense efforts are being made to rehabilitate the Tema Oil Refinery to enable it contribute to stabilizing petroleum prices which should see the light of day very soon.”
President Akufo-Addo cautioned against taking ad hoc measures that give only temporary reprieve but worsen the situation eventually.
