By Economist Dr Priscilla Baffour has urged government to strike a balance between political promises and economic realities, particularly in the area of taxation.
Speaking on Joy News’ PM Express Business Edition on Thursday, February 13, she stressed that while tax cuts may have been a key campaign pledge, the current economic climate demands a more pragmatic approach.
“It’s a difficult period, and I believe that there is nothing wrong if the government, I mean, the finance minister, comes out to say that we promised X, Y, and Z, but this is the reality—it is not possible,” she stated.
Dr Baffour argued that honesty and transparency about the economic situation would allow the government to make more practical decisions without losing public trust.
She acknowledged that rolling back taxes as promised may be politically expedient but warned that the potential economic repercussions could be severe.
“The risk to businesses and Ghanaians as a whole is that if the trajectory that the economy is currently on shifts and we enter into another phase of turbulence, it will be quite disastrous for everybody,” she cautioned.
Dr Baffour highlighted the impact of economic instability on the standard of living, particularly for fixed-income earners who struggle with high inflation.
She urged policymakers to be mindful of these broader economic implications before making sweeping tax cuts.
“Fixed income earners really struggle with high inflation and all that. And so, I do not think that it should be something that is impossible.
“Of course, initially, it would mean coming at a little political cost, but I think that the government has a lot of goodwill at the moment and should not be hasty in taking out all the taxes that it promised to remove if indeed it’s very difficult to make up for it.”
She explained that while reducing what has been termed “nuisance taxes” may be aimed at promoting production over taxation, economic growth does not happen overnight.
“The whole idea of, for example, taking out a lot of taxes, nuisance taxes, as we heard some time ago, is the fact that you want to de-emphasise taxation and look at production.
“And so, when the economy grows, tax revenue is a function of the growth of the economy. But the reality is that in our context, growth is quite difficult. It takes quite some time to be able to observe a given substantial level of growth.”
Dr Baffour advised the government to manage expectations carefully, noting that a well-communicated and gradual approach to tax reform would be more beneficial than an abrupt rollback of revenue sources.
“I believe that it’s early days, and they still have the goodwill of Ghanaians, so they can thrive on it and do what is practical,” she remarked.
Her comments underscore the delicate balance between political commitments and economic prudence, urging leaders to prioritise stability over short-term populist measures.
“As the government navigates its fiscal policy, Dr Baffour’s insights serve as a crucial reminder that economic sustainability must guide decision-making, even in the face of political pressure.
