Terkper presents budget and says we’ll resist overspending in 2016
The Minister of Finance, Mr. Seth Terkper, has stated that the government is committed to staying within its revenue limits and would discipline itself against overspending in 2016, which is an election year.
He also said the government, which would achieve that through its consolidation agenda, hinged on promoting fiscal discipline based on “enhanced domestic revenue mobilisation, prudent public expenditure management, improved debt management and the implementation of reforms in key areas of the economy,” would resist the temptation of the overspending associated with every election year.
Government to spend GH¢46.45 billion
Presenting the 2016 Budget Statement and Economic Policy of the government to Parliament in Accra on Friday, Mr. Terkper, who tabled the motion for the approval of the budget on behalf of President John Dramani Mahama, and sought approval to spend GH¢46.45 billion, including payment of arrears, said the budge would “build on the foundation laid to restructure and transform the economy towards sustained and inclusive growth.”
He said it would also minimise the country’s exposure to volatilities and position the country to consolidate its status as a middle-income country.
Intended to raise GH¢38.03 billion in revenues and grants, the budget would also make direct expenditures including GH¢2.94 billion to clear arrears and outstanding commitments, GH¢14.02 billion, representing 8.9 per cent of GDP on public sector employee compensation (wages and salaries, allowances, pensions, gratuities and social security contributions); GH¢2.54 billion, representing 1.6 per cent of GDP on goods and services, while GH¢10.5 billion, equivalent to 6.6 per cent of GDP, would be spend on paying interests on loans.
Mr. Terkper announced a number of measures that focused on ensuring increased tax compliance and improving collections, rather than new taxes.
The introduction of new taxes had been criticised in the past by analysts and labour unions for diluting disposable incomes. The analysts have rather preferred expanding the tax net and making collection more efficient. And these measures in the budget appears to answer such concensus.
“For 2016 and the medium term, tax policy will focus on measures that will ensure tax compliance and improve revenue administration rather than introduce new taxes. These measures include moving all processes to an electronic platform and accelerating the shift to a functional form of administration in all tax offices,” he said.
While setting up joint audit/investigation teams to conduct audits and investigations, the Ghana Revenue Authority (GRA) would also intensify the monitoring of Free Zones Enterprises by rolling out the Integrated Free Zones Unit in line with the GRA’s strategic plan 2015 -2017.
With poor monitoring, the free zones system, which gives tax and non-tax incentives to encourage exports, could be counterproductive, hence the strengthening of the monitoring regime of the GRA over that programme space.
The Finance Minister also said the excise tax stamp rate, which was increased from 150 per cent to 175 per cent would be rolled out fully next year.
Already, the GRA has been insisting on importers quoting Tax Identification Numbers (TIN) and tax office quotes before clearing consignments at the ports of entry.
Mr Terkper explained that the GRA had also reviewed and harmonised various tax laws such as the Income Tax Act, passed in 2015 to complement the Value Added Tax Act, the Customs Act and the Excise Law, adding that the Revenue Administrative Bill was expected to be laid in Parliament next year.
Non-tax revenue measures
Coming from the background that the non-tax revenue and internally generated funds of ministries, departments and agencies (MDAs), as well as state-owned enterprises grew at an annual average rate of 22.7 per cent over the past three years, the minister proposed a continuation of policy initiatives to further improve performance.
These measures will see six state-owned enterprises and agencies being weaned off government subvention initially and eventually being converted into limited liability companies.
The agencies are: The Driver and Vehicle Licensing Authority (DVLA); Environmental Protection Agency (EPA); Energy Commission (EC); Data Protection Commission (DPC); Gaming Commission (GC) and the Securities and Exchange Commission (SEC).
Mr. Terkper later told the Daily Graphic in an interview that the ultimate aim was to improve efficiency of those SoEs, improve their revenue performance to enhance investments, while creating some fiscal space for the government.
“This singular move, in direct and immediate terms, is expected to yield GH¢27 million savings on government expenditure within the budget,” the minister pointed out.
Having conducted a biometric exercise at the Controller and Accountant-General’s Department level, the government has proposed to continue supplementary measures in 2016 to further clean the public sector of ‘ghost’ names.
The measures, according to Mr. Terkper, included electronic payroll input forms (e-Forms); interfacing the public sector payroll database with the Social Security and National Insurance Trust (SSNIT) biometric database, as well as conducing a nationwide pension payroll head count.
In a progressive manner, the Ministry of Finance would also oversee the rolling out of a Human Resource Management Information System (HRMIS) as part of the Ghana Integrated Financial Management Information System (GIFMIS).
To effectively manage public expenditure and make funds available in a timely manner to meet planned expenditures, a number of policy initiatives are being undertaken to strengthen the cash management system.
Authorised public sector officials will now spend through various electronic smart cards such as e-Travel Card, e-Fuel Card, with the operation of a Treasury Single Account.
Infrastructure development initiatives
Mr. Terkper said the government had also completed a draft National Infrastructure Plan and would rely on Public-Private Partnerships in financing infrastructure development.
“A number of PPP projects will be implemented in the course of the year. Feasibility studies have been conducted on at least 18 PPP projects, while a number of them are at various stages of implementation,” he said.
Job creation/youth employment initiatives
Although government operations are generally expected to throw out jobs through the contracts it creates, Mr. Terkper announced that100,000 youth would be engaged in six different areas following the passage of the Youth Employment Act, 2015 (Act 887).
The areas where they would be absorbed include waste and sanitation; security services; community teaching assistantship; as community health assistants, as well as various youth initiatives such as in afforestation and youth in apparel under the community improvement programme.
“An additional 1,000 people with disabilities are expected to be engaged,” he added. – Graphic online