Introduce new taxes, cut borrowing - Ken Thompson to government

Ken Thompson, Chief Executive Officer of Dalex Finance

The Chief Executive Officer of Dalex Finance, Ken Thompson is urging the government to introduce new taxes to cater for its expenditure.

He cautions, however, that this should be done if only the government will be prudent with its spending.

Taking his turn at the CIMG, “A Conversation with Ken”, Mr. Thompson stated that Ghana’s debt level has reached an alarming rate, a situation that could create negative effects on the economy and throw the government’s One District One factory programme out of alignment with planned spending.

“We have a situation where Ghana’s income is being spent on three items. We are spending on wages and salaries, interest expense and statutory deduction. Once those three items have been paid for there is nothing left,” he said.

He observed that government is currently not investing in capital expenditure that will have the ability to pay for loans acquired to invest in such areas.

“What we are doing is funding recurrent expenditure like electricity, petrol, uniform for police. All those things are being funded with debt. That is not sustainable. We need to say cut. We need to cut and now recalibrate and say how do we get out of this situation,” he stressed.

Making some recommendations, Mr. Thompson pointed out that government will have to take some tough measures and face the reality.

“We can do three things. We can either increase income, we can cut expenditure or we can do both. But the situation we have now is not sustainable. What I am proposing is that one of the ways by which we can increase income is to increase taxes across board, for a short period— let’s say three years,” he suggested.

He maintained that the country is currently broke, a situation that possess economic danger to the financial stability of the country.

Mr. Thompson added that the cedi was overvalued using the Big Mac Index — published by The Economist to measure purchasing power parity (PPP) between two currencies.He argued that the situation has made imports cheaper compared to exports, creating a situation that may stifle government’s one district one factory programme due to cheap imports.