The Immorality of Ghana’s E-Levy
"The equation of taxation and theft is as old as extortion" - James Suzman
It is the first time I am writing extensively on the subject. I resolved to wait to the end of the drama although my heart felt as cold as a pack of ice thinking about how lazy the government is in its approach to mobilise revenue. Yes, E-levy is a lazy method.
I am not interested in writing to appear intelligent. My goal is and has always been to wake up the fast asleep Ghanaian people.
First, there is a logic behind taxation, which is that when you benefit from the infrastructure that the government has made available to citizens, then you have an obligation to pay a token. This token is used to maintain the existing infrastructure, expand it and or build more of it, and the cycle continues. To a large extent, these infrastructure are wealth creation machineries. They are “means of wealth” made available to citizens to make use of. Transport networks, industries, entertainment facilities, and most importantly education. These are wealth creation machineries. And so in the same train of logic, where wealth is not created, where the means of wealth has not been made available, tax(the token) becomes immoral. There are reasons why nations fail and nations develop. Taxation or the lack of it is not a reason for either.
Like I mentioned, it is a cycle, but where does it begin? The beginning of the cycle from wealth to tax and back to wealth, is where great leaders pay attention most, because it is the sustainability of the beginning that makes the cycle efficient and fair. No country developed on taxes. Countries have developed simply by at least spending just as much as they earn, even better, spending less than they earn. No amount of tax guarantees development.
30million Ghanaians pay taxes. Every Ghanaian pay tax but not all Ghanaians have equal access to the “means of wealth”. In a country where almost 70% of all its internal migration is towards its capital city, imposition of more taxes, especially when it is widespread (not targeted at a certain income group), as with the E-levy, is preposterous. I have heard politicians compare tax strategies in developed countries to Ghana, claiming that Ghanaians pay relatively less tax. Why would “educated” people be so dishonest? Already, charges on international bank transfers in Ghana is in the region of 9% to 10%! Try sending £10,000 from a Ghanaian account to an account in the UK. You are likely to receive only £9,000 in the UK.
However, if I wanted to move £400,000 from UK to Canada, it may cost me only up to 3%. What really is the point of E-levy apart from it being lazy thinking?
If you do not as a country have and control your own payment infrastructure, how do you begin to think of taxing citizens of it? You did not create the “means”. You at best gave the environment for private foreign companies to do so. Tax them! The end users already pay fees to them for their infrastructure!
The Excuse of Covid-19
E-levy will not be a Covid-19 shock-absorber.
Historically, three things have made countries resist economic shocks; large savings, low debt, strong foreign exchange reserve. Ghana is red on each of these and no criminal tax will save it unless we go to the beginning of the cycle. We have had Ghs350billion of loans and nothing to show for. How does Ghs6billion(1.7% of what we have received in loans alone) of tax save us? If we reversed rice importation for just a year, that will be Ghs14billion remaining in the country and same not being exchanged into dollars, further devaluing the cedi. Now think about fish, flour, maize.
In hard times, great leaders take radical steps. It is not surprising that politicians have a short-term orientation, because their real job is to lie and maintain power. What is surprising is the silence of the intelligentsia which translates into support of the madness.
Addendum: The Beginning
There are things that determine the success of every nation. No nation developed miraculously. Development is an effect of conscious causes, one of which is Education. There are about ten of these causes but if we have not been able to solve the problems of education, how do we begin to discuss any other thing? With education, I don’t mean just 8am to 5pm schooling. I mean the deliberate formation of character, the instilling of national conscience, the training of citizens to be civil, and then the formal acquisition of knowledge and skills. This cannot be done by making Senior High School free, but by levelling up basic education. The problem at the basic level is the bedrock of all mechanical problems in Ghana. If we all agree that there is a humongous gap at that basic level, such that all Ghanaian kids do not have equal access to standardised education (means of wealth), how do we support such immorality of a tax? The beginning of the cycle is unfixed and unfair.
When we are able to level up basic education, not with immoral taxes, but with revenue such as those from what I call Inherited National Wealth, which are mineral resources, land, water, climate (energy), then every other thing begins to fall in place. We begin to create human capital (human beings who can generate income), and then we can create a fair tax system. You can’t reap where you have not sowed. What did you give that you are taking a portion of?
When people begin to think of these, they become embittered, and this is how civil wars have occurred. You wonder why someone said he would stage a coup if E-levy is passed? This is it- unfair and immoral systems of revenue collection and distribution.
We will continue to talk if that’s all we can do. When we can fight, we will.
By Hubert Baidoo
