Poverty reduction strategies in Ghana have widened the inequality gap – Manteaw

Francis Kobena Tandoh
Friday, December 27, 2019

The various poverty reduction strategies adopted by successive governments in Ghana’s Fourth Republican dispensation have widened the inequality gap between the rich and the poor, according to Dr. Steve Manteaw.

Speaking exclusively to News Ghana on the side lines of a capacity building workshop organized by Tax Justice Coalition, Ghana, Dr. Manteaw, who is a Policy Analyst with the Integrated Social Development Centre (ISODEC), disclosed the various social protection strategies adopted by governments to ameliorate the negative impact of neo-liberal policies on the poor had not been effective.

This, he explained was so because such social intervention programmes have usually been tokenistic and not far-reaching.

This in essence means that the weakest in society who are to be assisted by governments to get some relief has not happened as pro-poor strategies from the way they are crafted and implemented end up rather benefiting the rich much to the disadvantage of those who really need such social interventions by governments.

He said, “Over the years, in the attempt by successive governments to attract Foreign Direct Investments (FDIs), we have by way of policy disadvantaged the poor and shied away from using taxation as a tool for social justice for redistribution of income. You can see this in our labour laws which makes it difficult for labour to even agitate for fair wages. You will see it also in our investment laws which grants tax incentives; sweeping ones of course to capital, so you bring in your investment and you become entitled to wide range of tax incentives which are denied poor people so in the course of time, we have had growing disparities between the rich and the poor and in the process widening the inequality gap in our country.”

Dr. Manteaw, who is also the immediate past Chairman of the Public Interest and Accountability Committee (PIAC) emphasized that the withdrawal of subsidies have worsened the plight of the poor than the middle and upper class in society.

“Of course, I am aware there has been some social protection strategies and in the particular case of the utility sector, you find that in the name of the liberalisation, we have withdrawn subsidies; a move which in my view hurts the poor more than the rich because most people; senior office holders and managers in the private sector have ways in which they are able to pass on or to recover the extra cost burden imposed by subsidy withdrawals. A lot of them are entitled to fuel coupons or allowances which are often denied the junior staff of most enterprises so then, when you withdraw subsidies, the poor workers will have to bear the burden of the full cost of increases in transportation fares whereas those in the upper echelons in the corporate world will pass on or the cost will be recovered by their employers therefore making the effect of the tariff withdrawals less burdensome on their incomes,” he remarked.

The Policy Analyst described the country’s system of taxation administration as not fair, a development which has the potential of widening the inequality gap between the haves and the have-nots.

He stated, “The tax system in Ghana is not fair because we have shifted the burden of taxation onto the poor and the marginalized in society. Groups who do not have the capacity and the opportunity to deploy schemes to reduce the burden of taxation in themselves. So, you find that largely corporate entities who make the most revenue are able to use creative accounting to avoid the payment of taxes on some of their income. At the individual level, professionals such as accountants, lawyers, doctors are also able to hide part of their income. A lot of professionals do not pay taxes on earnings from consultancies and so what is taxed is what they earn through formal arrangements where they are employed and paid.”

In order to ensure the country’s tax administration becomes fair, equitable, transparent and accountable, Dr. Manteaw urged governments to access the net effect of tax policies on the poor segment of the population and ensure the poor do not bear heavy burden and also move more resources to the impoverished segment of the population in ways that addresses the development imbalance.

Vice Chairperson for Tax Justice Coalition, Ghana, Louis Acheampong stressed on the critical role that taxation plays in the country’s economy and emphasized on the need to improve domestic revenue mobilization to fund government programmes and policies.

“Taxation in Ghana is critical and even as our current governmental strategy is talking about ‘Ghana Beyond Aid,’ Ghana can only become independent economically if we are able to improve our domestic revenue mobilization,” he said. Enditem